The prospective decision by Japan's government to take control of the Tokyo Electric Power Co. (TEPCO) may seem belated to the rest of the world, given the confusing way the firm has managed the Fukushima nuclear-reactor crisis. But it seems to reflect official recognition of the relatively quiet but deep public frustration with TEPCO. Indeed, while a large part of the rationale for potentially taking up to 50% of TEPCO may be to prevent Asia's largest utility from being completely overwhelmed by liability claims, an important reason may be to help manage an ongoing calamity that the company has shown little aptitude for.
The Japanese are known for their respect toward authority and enduring tolerance. The country's heated student demonstrations of the 1960s and '70s are long gone. But the magnitude of the Fukushima debacle has led to expressions of discontent even if not really through public confrontation.
If the hundred or so peaceful demonstrators in front of TEPCO headquarters in Tokyo on Thursday were an indication of citizen alarm over the Fukushima nuclear-power-plant crisis, then the mood was decidedly docile. The march lasted just about two hours with the participants ranging from their 20s to their 70s. They chanted a bit and a few placards were waved. The police even took three students into custody for unknown reasons. Undercover cops had been videotaping and photographing the proceedings even as Japanese TV broadcast trucks were parked nearby. Media coverage was conspicuously sparse. "The Japanese media voluntarily refrained from covering the event," says Yasuhiro Tanaka, chairman of Doro-Chiba, a labor union assisting the All Japan Federation of Student Unions, which organized the event. "We were trying to demonstrate against nuclear plants but there was little we could accomplish because of the police."
Instead of marching in the streets, the Japanese have taken to social media. Twitter has become the safe medium of critical opinion, as well as a resource for relief efforts. "If you can follow the Twitter stream in Japanese, there is probably 60% or 70% [with comments] saying, 'We can't believe the government or TEPCO anymore,'" says Kevin Carroll, a partner with EA International, a Tokyo-based environmental-engineering company. Carroll is volunteering with the Twitter-sourced #quakebook book project, a growing collection of personal accounts of the earthquake and tsunami. (All proceeds will go to the Japanese Red Cross.)
On Twitter, the potential combination of TEPCO and the government was not exactly met with applause. Several Tweeps were appalled that public funds would go to TEPCO officers; some called it an April Fools' Day joke. "When the International Atomic Energy Agency [IAEA] comes in and says, 'You should extend your evacuation zone,' and the government says, 'No, we don't have to,' people start to get very concerned," says Carroll. The Japanese government made the announcement on Thursday that it would not extend the evacuation zone despite the IAEA's findings that radiation from cesium 137 in the town of Iitate, 25 miles (40 km) northwest of the Fukushima Daiichi plant, is double its recommended limit.
Among the growing complaints, TEPCO was accused of ignoring warnings that the Fukushima plant was in a precarious location. "TEPCO has said the accident was beyond what they could have expected, but that's what crisis management is for," said Tomohiro Takanashi, chairman of the Crisis and Risk Management Society of Japan. "They are supposed to be prepared for the unpredictable."
TEPCO is one of the world's biggest power companies with over 44 million customers. The Japanese have found it strange that president Masataka Shimizu, 66, has not appeared in public since March 13. On Wednesday the company announced he had been hospitalized the day before because of high blood pressure and dizziness. Meanwhile, other company officials instead have been bowing apologetically to the public. TEPCO has also come under criticism from other corporations. "It is very unfortunate that ego and complacency plagued the organization, which had lost strength to deal with its biggest-ever crisis in an urgent manner," said Kazuo Inamori, chairman of national carrier Japan Airlines and one of the country's most respected business leaders.
The government had to get into the act if only to stanch TEPCO's financial wounds. On Wednesday, the company said that even $24 billion in emergency loans from Japan's biggest banks would not be sufficient to cover the costs it was racking up. An analyst at Merrill Lynch said that if the nuclear crisis drags on for two more years, liabilities for compensation claims alone could mount to $133 billion nearly four times TEPCO's equity. The company is boxed in by societal norms as well. It could very well claim immunity from legal claims because the earthquake and tsunami that caused the crisis were, so to speak, acts of God. But the likely public reaction to such a claim makes it shameful and thus untenable.
One burning question has been whether TEPCO has the capacity to deliver power reliably to its customers in the near future. Before news broke of a potential government takeover, people were wondering what the company would do if Tokyo faces another record-breaking heat wave this summer and air-conditioning needs to go full blast.
"I think the main concern will be the stability and level of the power supply over the summer," says Edward Brogan, managing director of Japan Advisory. "Right now we're in a period of very low power demand. In the summer, as people move to air-conditioning, power demand usually goes up 30% to 35%. The government will need to have a strategy of dealing with that potential issue." Kathy Matsui, chief strategist of Goldman Sachs in Tokyo, says, "The power shortage is resulting in supply-chain disruption, which is very disruptive for business growth and for consumers as well. Trains have to stop. Stores have to close early. It's all connected. The negative impact will be bigger than the Hanshin [Kobe] earthquake 16 years ago."
Brogan points to the need for a clear government response to the challenges ahead. "The government should have a program that supports the move to energy-saving technologies. Things like LED lighting that use a lot less power; subsidies to people that have energy-efficient offices, etc. That kind of policy, if done correctly, will have enormous positive economic impact." He adds, "I think there will be considerable spending on new technology to make Japan more energy efficient." "There will definitely be a rebound but we'll first have to see the economy take a hit," says Matsui. "We're assuming further outages, probably until February 2012."
For now, the streets of Tokyo seem quieter than normal, and certainly darker. "If you walk the streets at night, everything seems closed," says Carroll. "The izakaya [Japanese pubs serving food] are empty, and in Roppongi no one seems to be shopping in the brand stores. Maybe it's the Japanese sense of self-sacrifice: that it's bad form to be seen buying luxury goods or going out to eat or drink." The true test will come next week when Tokyo's cherry blossoms are in full bloom and the annual hanami rite of partying normally ensues. It could be the catharsis everyone, and the economy, needs, perhaps under moonlight, pondering the transience and unpredictability of life with a raised glass of sake.