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Japan's government agreed on a plan Friday to ensure that the operator of crippled Fukushima Dai-ichi nuclear plant can meet the massive costs of compensating people affected by the crisis.
The scheme involves establishing a fund financed by both public money and contributions from utilities that will provide financial support to Tokyo Electric Power Co., which expects to face a deluge of damage claims in the wake of the worst nuclear accident since Chernobyl in 1986.
Also Friday, the operator of the Hamaoka nuclear power plant in central Japan began the process of shutting down its reactors as part of an agreement with the government to temporarily suspend operations until it strengthens tsunami protections.
The government will fund the new compensation scheme with special bonds, though it did not say the amount it expects to issue, it said in a statement. The plan must still be made into a bill and be approved by parliament before taking effect.
"It is the government's duty to minimize the burden of the public," said Economy and Trade Minister Banri Kaieda. "We want to avoid big changes in the electricity bills and contain (the public burden) as much as possible."
TEPCO, which operates the Fukushima Dai-ichi plant, had already agreed earlier this week to drastic restructuring, cost-cutting and other conditions in exchange for government support in the compensation scheme.
The plan prevents TEPCO from setting a ceiling on liabilities. It also establishes a third-party commission to monitor and investigate the company's management.
Shinichi Ichikawa, the director of equity research at Credit Suisse in Tokyo, said the plan needed to achieve three targets: maintain the stability of electricity supply, not rattle financial markets and ensure victims of the March 11 disaster would be compensated.
"It looks like it's a good solution," he said.
Chubu Electric Co., which supplies electricity to central Japan, including the city of Toyota, where the automaker is based, said steps to idle the No. 4 reactor at the Hamaoka plant started Friday morning.
The company expects to begin halting the No. 5 reactor, its second operational reactor, on Saturday. Prime Minister Naoto Kan had requested the temporary shutdown amid concerns an earthquake with a magnitude of 8 or higher could strike central Japan sometime within 30 years.
The Hamaoka facility sits above a major fault line and has long been considered Japan's riskiest nuclear power plant.
Nuclear energy provides more than one-third of Japan's electricity, and shutting the Hamaoka plant is likely to exacerbate power shortages expected this summer. Its reactors account for more than 10 percent of Chubu's power supply.
The government has said it will not seek similar shutdowns of any other reactors in the country. Its decision came after evaluating Japan's 54 reactors for quake and tsunami vulnerability after the March 11 disasters that crippled the Fukushima Dai-ichi nuclear plant in northeast Japan, which is still leaking radiation.
Chubu Electric will also indefinitely delay a planned resumption of Hamaoka's No. 3 reactor, which has been shut down for regular maintenance since late last year.
Hamaoka is built directly over the subduction zone near the junction of two tectonic plates, and a major Tokai earthquake is said to be overdue.
The possibility of such a shallow magnitude 8.0 earthquake in the Tokai region was pointed out by Kiyoo Mogi in 1969, 7 months before permission to construct the Hamaoka plant was sought, and by the Coordinating Committee for Earthquake Prediction (CCEP) in 1970, prior to the permission being granted on December 10, 1970.
As a consequence, Professor Katsuhiko Ishibashi, a former member of a government panel on nuclear reactor safety, claimed in 2004 that Hamaoka was 'considered to be the most dangerous nuclear power plant in Japan' with the potential to create a genpatsu-shinsai (domino-effect nuclear power plant earthquake disaster).
In 2007, following the 2007 Chūetsu offshore earthquake, Dr Mogi, by then chair of Japan's Coordinating Committee for Earthquake Prediction, called for the immediate closure of the plant.