(Now They Tell Us) "TEPCO Should Have Been Bankrupted and Reorganized", Says Government Expert Committee Chairman

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):

東電は会社更生するべきだった…料金審査委員長

The Corporate Reorganization Act should have been applied to TEPCO, says the chairman of the committee to review electricity charges

東京電力の家庭向け電気料金の値上げ申請を検証する経産省の有識者会議「電気料金審査専門委員会」で２０日、委員長の安念潤司・中央大法科大学院教授が「（東電は）本当は会社更生（法の適用を）をしておくべきだった」と発言した。

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."

安念氏の発言は、委員会に出席した全国消費者団体連絡会の阿南久事務局長が「値上げの前に、東電に融資をした銀行や株主の責任を問うべきだ」と訴えたことに答えたもの。さらに、安念氏は「会社更生ですっきりすればよかったが、政府が（東電を）つぶさないと決めた。我々は与えられた要件で、議論している」と苦しい胸の内を明かした。

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:

昨秋、勝俣は福島の原発を本体から切り離す構想を議員に説明して回っていた。原発を東電や原子炉メーカー、機構などが出資する新会社に移し、東電はそれ以外の事業に集中する内容だ。「廃炉や賠償だけ切り離して（東電が）身軽になる発想は許さない」。昨年12月22日、企業向け値上げの方針を「権利」と唐突に発表したことも枝野や機構の怒りを招いた。

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.

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