And that was what TEPCO's ex-Chairman Tsunehisa Katsumata had insisted in the secret negotiation with the national government (specifically, with DPJ's Yoshito Sengoku, who has no official portfolio), as reported by Nikkei Shinbun on May 14, 2012 (subscriber-only article).
Firs, from Yomiuri Shinbun (6/20/2012):
The Corporate Reorganization Act should have been applied to TEPCO, says the chairman of the committee to review electricity charges
In a meeting on June 20 of the "expert committee to review electrical charges" set up by the Ministry of Economy, Trade and Industry to examine the application by TEPCO to raise the household electricity charges, Committee Chairman Junji Annen, professor at Chuo University Law School said, "To be honest, we should have filed for the Corporate Reorganization Act for TEPCO."
Annen's remark was in response to Hisashi Anan, Secretary-General of a consumer group called "All Japan Consumer Groups' Liaison Association 全国消費者団体連絡会", who attended the committee meeting and said, "Before raising electricity charges, we should hold accountable the banks that lend to TEPCO and TEPCO's shareholders." Professor Annen further revealed his difficult position by saying, "It would have been better if the Corporate Reorganization Act had been applied to TEPCO to make a fresh start, but the national government decided they would not let TEPCO go bankrupt. We are discussing here on conditions dictated to us [by the national government]."
What Mr. Katsumata wanted, and was denied by the Noda administration, was to separate TEPCO into "good TEPCO" and "bad TEPCO". From the Nikkei article:
Last fall, Katsumata was selling his idea to the members of the National Diet of separating Fukushima [I] Nuclear Power Plant from TEPCO. The idea was to move the nuclear power plant to a new company funded by TEPCO, reactor manufacturers, and Nuclear Damage Liability Facilitation Fund, and to free up TEPCO to concentrate on the rest of the core business. "We won't allow TEPCO to rid itself of burdens by separating out decommissioning and victim compensations." Edano and Nuclear Damage Liability Facilitation Fund were angry at TEPCO's abrupt announcement to raise electricity charges for businesseson December 22 last year, when the company said it was their "right" to do so.
Katsumata's approach makes total business sense. Even the not-very-business-savvy Obama administration had GM and Chrysler go bankrupt and have them reorganized by divesting units, putting the non-performing assets into one company (in case of GM, those assets remained in the old company and a new company was created to carry on the auto business). Bond holders and shareholders were made to eat their losses. Even the 1st-lien bond holders suffered a huge haircut, even though it does seem the labor union got an unfairly large stake in the new company.
It has indeed been the "right" (de facto maybe, but nonetheless) for any electric power companies in Japan to raise electricity charges when the "cost" to generate electricity changes. They've been allowed to pass on cost increases to the customers. That "cost" have traditionally included anything from company pension costs to generous interest rates on the savings plan for the employees, and that's what the national government has allowed any electric power company to do.
It was in the meeting with Sengoku in mid April, according to Nikkei, that Katsumata told Sengoku that he'd rather see his company go bankrupt than be taken over by the government, whom he clearly considered rank amateurs when it comes to the utility business.
Well, for that matter, any business.