Can new TEPCO chairman change mindset of power firm’s employees?

Yoshimitsu Kobayashi, former chairman of the Japan Association of Corporate Executives, has been named chairman of Tokyo Electric Power Company Holdings Inc. Under the new leadership, all employees should make serious efforts to reform the corporate culture.

TEPCO, which was effectively nationalized in 2012 after the accident at the Fukushima No. 1 nuclear power plant, has selected chairmen from outside the company. His predecessor, Takashi Kawamura, was a former chairman and president of Hitachi Ltd. The post of TEPCO chairman had been vacant since Kawamura, the third chairman since 2012, retired in June last year.

It cannot be said that management reforms have produced results. Within the company, the bureaucratic structure and lack of responsibility have persisted, and the efforts by former chairmen appointed from outside and other executives obviously turned out to be fruitless.

At a press conference, Kobayashi said: “Circumstances have arisen in which public trust [in our company] has been greatly lost. We have a mountain of challenges,” expressing concern about the current situation surrounding TEPCO.

At the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture, it was revealed that an employee used another person’s ID card to enter the central control room and several devices that detect intrusions were left in a state of malfunction. At the Fukushima No. 1 nuclear power plant, broken seismographs had also reportedly been left in a state of disrepair.

It is essential to strengthen corporate governance through leadership from top management and improve in-house culture.

Kobayashi, who is currently chairman of Mitsubishi Chemical Holdings Corp., has stressed the importance of corporate governance at the Japan Association of Corporate Executives. Having served as an outside director of TEPCO, he is also a member of the steering committee of a government body that compiles TEPCO’s business plans. It is hoped that he will demonstrate his ability to reform TEPCO.

Another challenge is the release into the sea of treated water that has been stored at the site of the Fukushima No. 1 nuclear plant. Following the government’s decision to approve the discharge, TEPCO intends to start releasing treated water in 2023. It must make efforts to secure safety and make thorough explanations to prevent reputational damage to local marine products, among others.

There is also an urgent need to rebuild its business. It is estimated that TEPCO needs to shoulder ¥16 trillion in costs mainly for the decommissioning of the Fukushima No. 1 nuclear power plant and compensation for the nuclear disaster. Under the reconstruction plan drawn up in 2017, TEPCO is supposed to raise ¥500 billion annually for these purposes.

However, it is believed that the company failed to reach that target in its consolidated results for the business year ending in March 2021. The restart of the Kashiwazaki-Kariwa nuclear power plant is expected to boost TEPCO’s profits, which fund those costs. But it is difficult for the time being to realize the reactivation of the nuclear power plant because the Nuclear Regulation Authority has issued a ban on the transfer of nuclear fuel to TEPCO in the wake of the irregularities.

Another blow to TEPCO is the fact that nearly 30% of its market share was lost to newly entering companies due to the liberalization of the electric power industry.

In order to strengthen its sales power and restarting its nuclear reactors, TEPCO seems to have no choice but to make steady efforts to regain public trust. To do this, it is indispensable to make President Tomoaki Kobayakawa and the 38,000 employees of the group aware of their responsibilities. This is Kobayashi’s most important task.

— The original Japanese article appeared in The Yomiuri Shimbun on May 11, 2021.