Japan’s Nuclear Power Plants
CHAPTER 4: The Build-Out of Japan’s Nuclear Power Plants
4.5 Effects of Dengen Sampo Subsidies on One Local Economy
140
According to Fukazawa (2006), since the 1980s there had been a strong correlation between the increase in the budget surplus and unspent funds and an increase in the number of “soft” projects, particularly under the Power Source Location Measure (PSLM) of the PSDAA. While those projects were implemented in the hope that it would help the local economy, no statistical
difference could be discerned between those regions hosting a nuclear reactor and those that did not, according to Fukazawa. He stated that in view of the growing amount of unspent funds in the
PSLM, ministry administrators might have felt compelled to spend money on unneeded projects.
By 2003, the surplus declined from about half of total expenditures to about a third. The ratio continued to decline to under seven percent by 2007, the lowest on record, but this level of surplus was still seen as a significant problem of over-budgeting (MOF, 2018c;
Cho, 2014). Finally, in March 2007, the Diet enacted the Law Concerning the Special Account (2007, Law No. 23), which ruled that when a major surplus occurred at endof -year settlement, the funds should be saved as a reserve and if the surplus continued, it should be transferred back to the General Account as revenue to be spent for general purposes in the following year. The law generally has prevented unspent funds from increasing, but the ratio of unspent to spent funds in the PSDAA continues to hover at around ten percent.
141
Figure 4.9 Dengen Sampo Subsidies provided to the Town of Mihama, 2001-2009
Notes: Miyoshi (2012) states that total subsidies for 2001-2009 amounted to $184.72 million, but the table presented totals of $113 million, a discrepancy of $71.72 million. The difference can be accounted for by including subsidies provided prior to 2001.
Source: Figure created by authors based on data from Miyoshi, 2012.
The Dengen Sampo subsidies provided to Mihama were primarily spent for building public facilities, including elementary schools, a middle school, kindergartens, water supply systems and town roads. Mihama spent a total of about $50 million in Dengen Sampo subsidies to build a range of public facilities from 1974 to 1993 (See Table 4.8). It is unfortunate that the subsidies were not invested in establishing infrastructure that could create future industries and associated businesses, however (Kobe University, 1999).
Table 4.8 Dengen Sampo Subsidies for Mihama and the Mihama Public Work Projects Note: Costs are rounded up to the nearest thousand
($ Thousands)
Year Reactor Projects Total
Project Costs
Subsidies Ratio of Subsidies to Total Project Cost (%) 1974 Mihama 3 Town road Mihama
Middle School line
14 14 98.6
Mihama Middle School indoor gymnasium
2392 2,391 100
1975 Town road
Yamagami line
203 203 100
Mihama Middle School wrestling gymnasium
237 237 100
Takenami city hall 340 200 58.8
Farm road Shioiri 26 26 100
2001 2002 2003 2004 2005 2006 2007 2008 2009 Subsidies 8280 7550 8670 9520 9760 10820 11280 25530 21440
0 5000 10000 15000 20000 25000 30000
$ Thousand
142 line
Fugen Town road Sakajiri Ota line
766 766 100
Agricultural drain (Miyakawa)
44 44 100
Farm road Ochiai lone
100 100 100
1976 Mihama 3 Town road Sakajiri Ota line
129 126 98
Town road Kanayasu line
86 86 100
Water supply system expansion
511 505 98.8
Central city hall 3,299 2,489 75.4
Town pool 308 295 95.9
1982 Tsuruga 2 Fishing boat Hyuga hoisting facility
77 77 100
1983 Sugahama simple
water service
300 260 86.7
Yahazu Kindergarten 557 470 84.5 Higashi Elementary
School Survey Design
47 45 94.9
1984 Higashi Elementary
School building
4,247 4,000 94.2
1985 Higashi Elementary
School gymnasium
1,520 1,460 96.1
Monju Sugahama
Elementary School land acquisition
1,184 1,060 89.5
1986 Tsuruga 2 Nyu simple water service
493 396 80.3
Trash collection vehicles
26 25 96.1
Nyu fishing boat landing
180 130 72.2
Sugahama ice crusher 77 67 86.6
Monju Sugahama
Elementary School building
2,972 2,800 94.2
Sugahama
Elementary School indoor playground
1,198 1,150 96
1988 Town baseball
ground site preparation
3,147 2,850 94.2
Shinsho Elementary 761 700 92
143 School site
preparation
1989 Town baseball
ground night lighting construction
2,713 13,350 492
Shinsho Elementary School building
5,076 4,900 96.5
Tobu Medical Clinic 1,407 1,340 95.2 Sugahama Nursery
School
774 460 59.4
Tsuruga Coal Thermal Power Plant
Crematorium ground preparation
159 153 95
1990 Monju Shinsho Nursery School
789 540 69.4
Tsuruga Coal Thermal Power Plant
Crematorium building
1,828 1,400 76.6
1992 Monju Wired radio station equipment
537 414 77.1
Water supply system intake facility
41 37 89.8
Nyu Elementary School building
2,683 2,625 97.8
Nyu Nursery School 898 861 95.9
Nishi Nursery School 545 540 99.2 Tsuruga
Coal Thermal Power Plant
Wired radio station equipment
537 71 13.2
1993 Monju Water supply system intake facility
742 673 90.7
Total 43,970 50,337 87
Source: Kobe University, 1999.
Mihama also received property tax and nuclear fuel tax revenues from the nuclear power plants.
For example, 60 to 70 percent of Mihama’ tax revenues came from property taxes paid by nuclear plant owners (See Figure 4.10). In 2001, the property tax paid by nuclear plants was about $21.4 million, which represented 74.4 percent of Mihama’s entire tax revenue base (6.34 + 21.38 + 1.02 =
$28.74 million tax revenue base) (Miyoshi, 2012). Mihama is overwhelmingly dependent on the nuclear property tax for its revenue. If there are fewer or no nuclear plants, Mihama would have great difficulty sustaining its economy.
144
Figure 4.10 Nuclear Plant Property Tax, Municipal Tax, and Ratio of Nuclear Property Tax to Total Tax, 2001-2009
Notes: Total Municipal Tax, 2001-2009 = $72.51 million; Total Nuclear Property Tax, 2001-2009
= $166 million; no other taxes are incorporated in the calculation because they are of insignificant value.
Source: Figure created by the authors based on data from Miyoshi (2012).
In addition to the Dengen Sampo subsidies, the town of Mihama received substantial benefits from KEPCO. From 1991 to 2010, the gifts amounted to about $55.3 million (Miyoshi, 2012). During that time, Mihama reactors had two serious accidents. On 9 February 1991, a break in a heat transfer tube at the Mihama 2 steam generator triggered a SCRAM with full activation of the Emergency Core Cooling System. The operators had failed to install a bracing bracket to the heat transfer tube as designed. Eventually, a small amount of radiation was released to the environment.
The accident was rated as INES 2.
On 9 August 2004, a fatal accident occurred at Mihama 3. Four workers were scalded to death by superheated steam, a fifth died on August 25th. The accident was caused by a break in a steam pipe in the non-radioactive part of the reactor. In 27 years of operation the 56 cm diameter pipe had never been checked for corrosion. The walls of the pipe had worn down from an initial 10 mm of carbon steel to 1.4 mm (Wein, 2013; Citizen’s Nuclear Information Center (CNIC), 2004). Despite the seriousness of these accidents and the plant management’s apparent lax attitude toward safety, Mihama residents did not register any strong complaints. Residents may have become inured to the risks of living next to nuclear power plants. Moreover, as population and indigenous industries continued to decline, residents likely felt a greater dependence on nuclear power plants for their livelihood.
With a population of about 5,500 in 2006 (half what it was in the 1950s), only 58 residents (1 percent) were engaged in fishery and 15 (0.3 percent) were employed in agriculture. The largest
2001 2002 2003 2004 2005 2006 2007 2008 2009 Property Tax from Nuclear
Plants 21.38 21.69 20.66 19.31 17.87 16.57 15.81 16.36 16.74 Total Municipal Tax 6.34 8.47 7.73 8.91 9.34 9.01 8.78 7.46 6.47
% of Nuclear Property Tax to Total of Municipal Tax and
Nuclear Property Tax
77.1 71.9 72.8 68.4 65.7 68.7 64.3 68.7 72.1 55 60 65 70 75 80
0 5 10 15 20 25 30 35
%
$ Million
145
numbers of people, about 2,000, were in the service sector and 700 people (12 percent) were engaged in the retail or wholesale business (See Figure 4.11). Moreover,
About 1,000 people (20 percent) were engaged in construction work related to the nuclear plants;
About 800 people (15 percent) were engaged in electricity, gas, heating and plumbing trades that were also linked to the nuclear plants.
Thus, if the nuclear industry were not in Mihama about a third of the town would have few ways to earn a living (Miyoshi, 2012).
Figure 4.11 Economic Snapshot of the Town of Mihama Category of Industry Shown:
Primary—Agriculture, Forestry, Fishery
Secondary—Mining, Construction, Manufacturing
Tertiary—Electric, Gas, Heating Supply, Water Supply, Transportation, Information and Communication, Retail, Wholesale, Finance, Insurance, Real Estate, Service, Public Service.
Source: Miyoshi, 2012.
Despite the revenues that the town of Mihama receives from the Dengen Sampo subsidies and the property taxes from the nuclear power plants, Mihama’s financial strength index34 has remained below 1.0 (See Figure 4.12). This suggests that the town is unable to function on its own and continues to require government subsidies.
34 The financial strength index is an index used to measure the financial strength of local communities and is a value obtained by dividing the standard fiscal revenue by the standard fiscal expenditure. It usually is the average of the past three years. If the financial power index falls below 1.0, the community is regarded as unable to perform administrative functions with the tax revenues from its local community and would become a recipient of the central government tax subsidies.
71 1469
4766
Number of Workers by Industry Category, as of 2006
11.7 51.8
715
Gross Production by Industry Category, as of 2003, $ Million
146
Figure 4.12 Trend in the Financial Strength Index of the Town of Mihama, 2001-2009 Source: Figure created by authors based on the data from Miyoshi (2012).
The financial vulnerability of the town of Mihama became apparent on 17 March 2015. That was the day Mihama residents learned that KEPCO and JAPC had decided to decommission Mihama 1 and 2 and Tsuruga 1. Since the Fukushima nuclear disaster and the implementation of new safety regulations, the owners of the old reactors had to face a tough business decision. Given the high cost of updating and modernizing older reactors, which generally had small generation capacities, the owners decided it was more economical to decommission them. Two years later the town learned that FBR Monju was to be decommissioned. Worse still, the Nuclear Regulation Authority (NRA) had discovered that an active fault ran underneath the Tsuruga Nuclear plant site, which meant that JAPC’s plans to build Tsuruga 3 and 4 had to be abandoned.
There have been side effects from the Dengen Sampo subsidies. Local governments such as Mihama became accustomed to and dependent on revenues generated by the continuing operation of the nuclear power plants. When a nuclear reactor approaches end of the life, for example, the prefecture and the municipality often would lobby for the construction of another reactor to keep the flow of subsidies going. These requests brought other problems to the surface. Anti-nuclear sentiment drove plant owners to add reactors to existing plant sites, thereby increasing the complexity of those sites and the risks associated with managing and recovering from a reactor accident.
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