Japan's Nuclear Crisis Takes Its Toll On Utility

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The Japanese utility company that owns the Fukushima nuclear complex, is struggling with more than just trying to contain the situation at the crippled plant. Since this month's earthquake and tsunami, the company has been under fire in Japan and its stock has dropped precipitously.

RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

LINDA WERTHEIMER, host:

And I'm Linda Wertheimer.

Among the casualties of Japan's earthquake and tsunami may be its largest utility company. Tokyo Electric Power Company, or TEPCO, owns the nuclear reactor complex damaged in the quake. And in a country where overt displays of anger are frowned upon, nearly everyone is attacking the way TEPCO handled the incident. NPR's Jim Zarroli reports from Tokyo.

JIM ZARROLI: One again this week a senior TEPCO official appeared at a press conference to beg his country's forgiveness.

Mr. TSUNEHISA�KATSUMATA (Chairman, TEPCO): (Foreign language spoken)

Unidentified Woman: Katsumata says he would first like to express his deep condolence to the victims of the earthquake.

ZARROLI: It fell to chairman Tsunehisa�Katsumata to apologize, because the company's president had just been hospitalized with dizziness and high blood pressure, which was widely attributed to stress.

Even the prime minister has been piling on TEPCO for its clumsy handling of the reactor complex repair. One frequent criticism is that TEPCO waited too long to cool off the reactors by pouring seawater on them, because it was worried about damaging them - something TEPCO has denied.

Najmedin Meshkati, engineering professor at the University of Southern California, says whatever the truth, TEPCO has been less than forthright with information and indifferent to safety.

Professor NAJMEDIN MESHKATI: One of the biggest problems with TEPCO, in addition to its lack of good, clean and healthy organization of safety culture, has been its lack of leadership.

ZARROLI: Meshkati says TEPCO has been implicated in scandal before. In 2002, four senior officials quit after the company was accused of falsifying inspection reports. Meshkati says the company should have learned from that incident and gotten more serious about safety. But it didn't. Party because of the cozy relationship it enjoys with regulators. After March 11th, Meshkati says, the company has no choice but to change.

Prof. MESHKATI: This incident is the straw that broke camel's back. TEPCO has to go through a major organizational culture change. That's the only way that this company can be saved.

ZARROLI: Meanwhile, the troubles are taking a huge financial toll on TEPCO. The world's fourth biggest utility, TEPCO has long been seen as a corporate cash cow. Now it has watched its share price fall by three-quarters. Hiroki Shibata is an analyst at Standard & Poor's, which downgraded TEPCO's debt on March 18th, and he says things aren't getting any better for the company.

Mr. HIROKI SHIBATA (Standard & Poor's): (Through translator) The situation has gotten worse, since then, for three reasons. They face the cost of compensating for the damage, the recovery costs and also the costs of providing alternative fuels following the shutdown of the reactors.

ZARROLI: One analyst's report that came out this week said TEPCO will probably face damage claims of $130 billion from people affected by the reactor accident. Shibata says the only reason TEPCO isn't in bigger trouble is that the government is widely expected to bail it out. But, he says, TEPCO's financial future is murky right now.

Mr. SHIBATA: (Through translator) Because compensation and other costs are estimated to be huge, the question is whether the government will support them financially. And if so, how much?

ZARROLI: This week, a senior cabinet official raised the possibility TEPCO could be nationalized, meaning it would be taken over by the government. For now, the company has more pressing concerns - figuring out how to end the crisis and begin to repair the damage that's been done.

Jim Zarroli, NPR News, Tokyo.

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