Insight: After disaster, the deadliest part of Japan's nuclear clean-up

Tue, Aug 13 22:16 PM EDT By Aaron Sheldrick and Antoni Slodkowski TOKYO (Reuters) - The operator of Japan's crippled Fukushima nuclear plant is preparing to remove 400 tons of highly irradiated spent fuel from a damaged reactor building, a dangerous operation that has never been attempted before on this scale. Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area. Tokyo Electric Power Co (Tepco) is already in a losing battle to stop radioactive water overflowing from another part of the facility, and experts question whether it will be able to pull off the removal of all the assemblies successfully. "They are going to have difficulty in removing a significant number of the rods," said Arnie Gundersen, a veteran U.S. nuclear engineer and director of Fairewinds Energy Education, who used to build fuel assemblies. The operation, beginning this November at the plant's Reactor No. 4, is fraught with danger, including the possibility of a large release of radiation if a fuel assembly breaks, gets stuck or gets too close to an adjacent bundle, said Gundersen and other nuclear experts. That could lead to a worse disaster than the March 2011 nuclear crisis at the Fukushima plant, the world's most serious since Chernobyl in 1986. No one knows how bad it can get, but independent consultants Mycle Schneider and Antony Froggatt said recently in their World Nuclear Industry Status Report 2013: "Full release from the Unit-4 spent fuel pool, without any containment or control, could cause by far the most serious radiological disaster to date." Tepco has already removed two unused fuel assemblies from the pool in a test operation last year, but these rods are less dangerous than the spent bundles. Extracting spent fuel is a normal part of operations at a nuclear plant, but safely plucking them from a badly damaged reactor is unprecedented. "To jump to the conclusion that it is going to work just fine for the rest of them is quite a leap of logic," said Gundersen. The utility says it recognizes the operation will be difficult but believes it can carry it out safely. Nonetheless, Tepco inspires little confidence. Sharply criticized for failing to protect the Fukushima plant against natural disasters, its handling of the crisis since then has also been lambasted. Last week, Prime Minister Shinzo Abe ordered the government to take a more active role in controlling the overflow of radioactive water being flushed over the melted reactors in Units 1, 2 and 3 at the plant. GIANT FRAME The fuel assemblies are in the cooling pool of the No. 4 reactor, and Tepco has erected a giant steel frame over the top of the building after removing debris left behind by an explosion that rocked the unit during the 2011 disaster. The structure will house the cranes that will carry out the delicate task of extracting fuel assemblies that may be damaged by the quake, the explosion or corrosion from salt water that was poured into the pool when fresh supplies ran out during the crisis. The process will begin in November and Tepco expects to take about a year removing the assemblies, spokesman Yoshikazu Nagai told Reuters by e-mail. It's just one installment in the decommissioning process for the plant forecast to take about 40 years and cost $11 billion. Each fuel rod assembly weighs about 300 kilograms (660 pounds) and is 4.5 meters (15 feet) long. There are 1,331 of the spent fuel assemblies and a further 202 unused assemblies are also stored in the pool, Nagai said. Almost 550 assemblies had been removed from the reactor core just before the quake and tsunami set off the crisis. These are the most dangerous because they have only been cooling in the pool for two and a half years. "The No. 4 unit was not operating at the time of the accident, so its fuel had been moved to the pool from the reactor, and if you calculate the amount of cesium 137 in the pool, the amount is equivalent to 14,000 Hiroshima atomic bombs," said Hiroaki Koide, assistant professor at Kyoto University Research Reactor Institute. Spent fuel rods also contain plutonium, one of the most toxic substances in the universe, that gets formed during the later stages of a reactor core's operation. INADVERTENT CRITICALITY "There is a risk of an inadvertent criticality if the bundles are distorted and get too close to each other," Gundersen said. He was referring to an atomic chain reaction that left unchecked could result in a large release of radiation and heat that the fuel pool cooling system isn't designed to absorb. "The problem with a fuel pool criticality is that you can't stop it. There are no control rods to control it," Gundersen said. "The spent fuel pool cooling system is designed only to remove decay heat, not heat from an ongoing nuclear reaction." The rods are also vulnerable to fire should they be exposed to air, Gundersen said. The fuel assemblies are situated in a 10 meter by 12 meter concrete pool, the base of which is 18 meters above ground level. The fuel rods are covered by 7 meters of water, Nagai said. The pool was exposed to the air after an explosion a few days after the quake and tsunami blew off the roof. The cranes and equipment normally used to extract used fuel from the reactor's core were also destroyed. Tepco has shored up the building, which may have tilted and was bulging after the explosion, a source of global concern that has been raised in the U.S. Congress. The utility says the building can withstand shaking similar to the quake in 2011 and carries out regular structural checks, but the company has a credibility problem. Last month, it admitted that contaminated water was leaking into the Pacific Ocean after months of denial. The fuel assemblies have to be first pulled from the racks they are stored in, then inserted into a heavy steel chamber. This operation takes place under water before the chamber, which shields the radiation pulsating from the rods, can be removed from the pool and lowered to ground level. The chamber is then transported to the plant's common storage pool in an undamaged building where the assemblies will be stored. Tepco confirmed the Reactor No. 4 fuel pool contains debris during an investigation into the chamber earlier this month. Removing the rods from the pool is a delicate task normally assisted by computers, according to Toshio Kimura, a former Tepco technician, who worked at Fukushima Daiichi for 11 years. "Previously it was a computer-controlled process that memorized the exact locations of the rods down to the millimeter and now they don't have that. It has to be done manually so there is a high risk that they will drop and break one of the fuel rods," Kimura said. Under normal circumstances, the operation to remove all the fuel would take about 100 days. Tepco initially planned to take two years before reducing the schedule to one year in recognition of the urgency. But that may be an optimistic estimate. "I think it'll probably be longer than they think and they're probably going to run into some issues," said Murray Jennex, an associate professor at San Diego State University who is an expert on nuclear containment and worked at the San Onofre nuclear plant in California. "I don't know if anyone has looked into the experience of Chernobyl, building a concrete sarcophagus, but they don't seem to last well with all that contamination." Corrosion from the salt water will have also weakened the building and equipment, he said. And if an another strong earthquake strikes before the fuel is fully removed that topples the building or punctures the pool and allow the water to drain, a spent fuel fire releasing more radiation than during the initial disaster is possible, threatening about Tokyo 200 kilometers (125 miles) away. When asked what was the worst possible scenario, Tepco is planning for, Nagai said: "We are now considering risks and countermeasures." (Corrects spelling of Hiroshima in second paragraph.) (Additional reporting by James Topham and Mari Saito; Writing by Aaron Sheldrick; Editing by Raju Gopalakrishnan) ================== Fukushima inspectors 'careless', Japan agency says, as nuclear crisis grows Fri, Aug 23 04:25 AM EDT 1 of 3 HIRONO, Japan (Reuters) - The operator of Japan's wrecked Fukushima nuclear plant was careless in monitoring tanks storing dangerously radioactive water, the nuclear regulator said on Friday, the latest development in a crisis no one seems to know how to contain. Tokyo Electric Power Co. also failed to keep records of inspections of the tanks, Nuclear Regulation Authority (NRA) Commissioner Toyoshi Fuketa told reporters after a visit to the nearby Fukushima Daiichi plant. Fuketa visited the plant on Friday after NRA chairman Shunichi Tanaka said this week he was concerned more of the hastily built giant containers would fail. "Fundamentally, for a facility holding that kind of radioactive water, they did not take action that foresaw the risks of possible leaks," Fuketa said. "On top of that, and this is an impression I had before my visit, I can't help but say that the inspections were careless." Japan's nuclear crisis this week escalated to its worst level since a massive earthquake and tsunami crippled the plant more than two years ago, with Tokyo Electric saying a tank holding highly contaminated water leaked 300 tons of radioactive fluid. It was the fifth and most serious breach of the same type of tank, as the crisis goes from bad to worse, prompting neighboring China to express shock at the continuing leaks. A tsunami crashed into the plant, north of Tokyo, on March 11, 2011, causing fuel-rod meltdowns at three reactors, radioactive contamination of air, sea and food and triggering the evacuation of 160,000 people. It was the world's worst nuclear accident since Chernobyl in 1986. There are 350 tanks in place at Fukushima holding radioactive water used to cool the fuel rods. The plant is fast running out of space. Tokyo Electric said on Thursday new spots of high radiation had been found near the storage tanks, raising fear of fresh leaks. Tokyo Electric, which has long had problems with documentation, did not keep proper records of its tank inspections and therefore missed problems, Fuketa said. (Reporting by Mari Saito; Writing by Aaron Sheldrick; Editing by Shinichi Saoshiro and Nick Macfie) ================= "Fundamentally, for a facility holding that kind of radioactive water, they did not take action that foresaw the risks of possible leaks," the Nuclear Regulation Authority Commissioner Toyoshi Fuketa said at a press briefing in Hirono. "On top of that – and this is an impression I had before my visit – I can't help but say that the inspections were careless." ========== Japan government abandons hands-off approach to Fukushima clean-up Sun, Sep 01 17:12 PM EDT image By Linda Sieg and Mari Saito TOKYO (Reuters) - Japan's government is moving to take a more direct role in the clean-up of the wrecked Fukushima nuclear plant, as concerns grow over the ability of embattled operator Tokyo Electric to handle the legacy of the worst atomic disaster in a quarter century. The concerns have also revived debate about the future of Tokyo Electric Power Co (Tepco) itself, including early-stage proposals to put its toxic nuclear assets under government control and leave the rest of the company as a provider of power to the nation's biggest economic region. "I want the government to have a responsible framework - not just for checking what Tokyo Electric is doing to deal with Fukushima - but for the government to commit to dealing with the Fukushima problem itself and conduct this as a joint operation, including the water problem and decommissioning," "Concerning the question of what the government will pay for and what Tepco will pay for, I think we need to debate and redraw the line," said Tadamori Oshima, who heads the ruling Liberal Democratic Party's taskforce on post-disaster reconstruction. Oshima told Reuters in an interview. Public worries about Fukushima, revived by news of leaks of radiated water at the plant, have threatened to further delay the restart of other off-line reactors - a key element of Prime Minister Shinzo Abe's recipe for economic revival and a pillar of the turnaround plan Tepco has given its creditor banks. Japan's nuclear industry, which once provided a third of the nation's power, has nearly ground to a halt since a massive quake and tsunami struck the coastal Fukushima plant in March 2011, causing reactor meltdowns. Tepco has been pumping water over the reactors to keep them cool, storing the radioactive waste water as well as contaminated ground water in ever-growing numbers of above-ground tanks. "What is clear by now and can hardly be ignored is that Tepco as a private company is overwhelmed by the containment work in Fukushima," said Martin Schulz, a senior research fellow at Fujitsu Research Institute. "The discussion about nationalizing or breaking up Tepco and at least putting the stabilization of the Fukushima reactors under direct government control is back." Japanese officials also fear the glare of international attention could threaten Tokyo's bid to host the 2020 Olympics, a decision on which will be made by the International Olympics Committee on September 7 in Buenos Aires. Japan's foreign ministry has begun issuing English language updates on the plant and the Tokyo Metropolitan Government now carries the latest radiation data on its website showing that radiation levels in the capital, some 230 km (140 miles) from Fukushima, are on par with or lower than London and New York. GOVERNMENT INITIATIVE Tepco said on the weekend that radiation near a tank holding highly contaminated water at the plant had spiked 18-fold, to a level that could kill an exposed person in four hours. It said no new leak had been detected at the tank, but another leak was found from a pipe connecting two other tanks. Tepco, Japan's largest utility, last year got a 1 trillion yen ($10.2 billion) injection of tax money in exchange for giving the government a de facto controlling stake but management has been left to the company. The firm also gets public funds - in theory to be paid back - to help compensate residents forced to flee after the 2011 quake and tsunami triggered triple meltdowns at the plant. The government has insisted that the utility should be responsible for the cost of decommissioning the reactors, a job expected to take decades and require as yet non-existent technologies, although the government has budgeted research and development funds - including an industry ministry request for a 40 percent boost to 12.5 billion yen in the budget for 2013/14. The government has said it will unveil steps to address the huge accumulation of radioactive water at the plant soon. Abe's cabinet is also likely to discuss this week funding for the Fukushima clean-up after a series of revelations about leaks of radioactive water at the coastal plant, Oshima said. Steps under consideration would fall short of the liquidation called for by Tepco's harshest critics - including Hiroki Izumida, the governor of Niigata Prefecture, which hosts Tepco's mammoth Kashiwazaki Kariwa nuclear plant. Such calls were rejected in the months after the March 2011 disaster, when authorities judged Tepco was too big to fail. "First, the government should make a further commitment and make every effort under the current framework," Oshima said. LDP Deputy Secretary General Koichi Haguida, a close aide to Abe, agreed liquidation was not in the cards but said the government must take the lead not just in dealing with the floods of water contaminated by the process of keeping the damaged reactors cool, but in decommissioning as well. "Fukushima is a problem that must be separately resolved. So rather than leaving this solely to Tepco's responsibility, the government will take the initiative and get involved in dealing with the contaminated water and decommissioning to a significant extent," he told Reuters in an interview. It is unclear whether more direct government involvement would open the door wider to foreign contractors. U.S. firms such as Kurion and Shaw Group, a unit of Chicago Bridge & Iron Company, and EnergySolutions Inc have been engaged in water treatment at Fukushima, though a Reuters investigation in December found foreigners had won few, if any, contracts to develop technologies for scrapping the reactors. DECOMMISSIONING AGENCY? One option that has been floated is to create a new legal framework to give the Japanese government direct oversight at Fukushima, perhaps along the lines of Britain's National Decommissioning Authority, a public body charged with managing the dismantling of Britain's atomic power and research stations. "I have said from way back that Japan should set up a decommissioning agency," Yasuhisa Shiozaki, the LDP's acting policy chief, said on a TV show last week. Tepco said the utility welcomed the government's involvement in dealing with contaminated water but said it was hard to comment on any possible spin-off of the Fukushima operations. "Either way, the company will continue to work with the government to thoroughly carry out decommissioning," company spokesman Yoshimi Hitotsugi said. Taking on the Fukushima clean-up as a government project could be politically risky for Abe, who returned to power for a rare second term in December, since that would mean it could no longer lay the blame for missteps at Tepco's door. Tepco's admission on July 22 - one day after Abe's LDP-led bloc won an upper house election - that contaminated water was leaking into the Pacific despite earlier denials, spurred the government to pledge to support efforts to stem the flow. The intervention by the government at Fukushima comes at a time when Tepco's long-term sustainability remains in doubt. The utility has aggressively cut costs and hiked electricity rates last year. But its failure to win local support for restarting its Kashiwazaki Kariwa nuclear plant has cost it an estimated $1 billion per month in added fuel costs. "For Tepco to be reborn, it is imperative for the Kashiwazaki nuclear plant to start moving," said Osamu Goto, a director general for energy and environment policy at the industry ministry's Natural Resources and Energy Agency. "If this situation continues, they will have to raise rates again or we enter bankruptcy territory." (Additional reporting by Aaron sheldrick and Taro Fuse; Editing by Mark Bendeich) ================================ Insight: Japan ponders Fukushima options, but Tepco too big to fail Tue, Sep 10 17:01 PM EDT By Linda Sieg TOKYO (Reuters) - Fukushima nuclear plant operator Tepco Electric's response to the world's worst atomic disaster in a quarter century has been called ad hoc and more concerned with cost than safety, but 30 months later, the utility is still in charge. Prime Minister Shinzo Abe, in the centerpiece of Tokyo's successful bid to host the 2020 Olympics, said he would be personally responsible for a plan to cope with the legacy of the March 2011 disaster in which a massive earthquake and tsunami caused triple meltdowns, spewing radiation and forcing some 160,000 residents to flee their homes. A crisis over radiation-contaminated water at the plant has revived calls to put Tokyo Electric Power Co (Tepco) into bankruptcy as a prelude to nationalizing the clean-up and shut-down of the reactors, but there is little political support for the idea given its potential fallout for financial markets, Tepco's creditors and other nuclear utilities. With concerns over Tepco's ability to cope, policymakers are pondering ways to take the Fukushima shut-down off the utility's hands, perhaps through an agency along the lines of Britain's Nuclear Decommissioning Authority. Even that, though, faces hurdles, including the likely need for new legislation, clarity on the size of the bill for taxpayers and government liability, and working out the implications for Japan's other utilities. That means, at least for now, the government may just end up pouring in more money, leaving Tepco in charge while stepping up official oversight. "They haven't come up with any good idea yet," said one former government official, although he said various options were being discussed. "Abe is not shy about providing government support, but I don't think he's thinking about any radical change of the structure of this company," he said, referring to calls to put Tepco through bankruptcy procedures. ON LIFE SUPPORT Abe's government last week said it would spend nearly half a billion dollars to contain the leaks and decontaminate water at the facility. That's on top of a 1 trillion yen ($10 billion) injection of public funds last year and a 5 trillion yen government credit line for compensating disaster victims. "Clearly the government is using state funds to extend Tepco's life, so the only way forward is to legally bankrupt the firm and make clear who is responsible, including past directors, financial institutions and shareholders," said Kazuyoshi Sato, an assembly member in Iwaki City just outside the 30 km (18.5 mile) exclusion zone around the Fukushima plant. Few in Tokyo support that view. "I don't think it's right to put in taxpayers' money without Tepco going down," said ruling Liberal Democratic Party lawmaker Taro Kono, who has long been at odds with his party over nuclear energy. But he added: "It seems I'm the only one, or one of just a few, being noisy about liquidation." Tepco's admission in July that contaminated water had flowed into the Pacific Ocean and news that highly contaminated water was leaking from a tank storing water used to cool the melted reactor cores prompted Abe's pledge to take the lead and bolster government oversight. Several ruling party politicians, however, said Tepco's bankruptcy - considered but rejected in the months after the disaster because authorities decided the utility was too big to fail - was not on the table now. "Tepco is, in reality, bankrupt," said LDP lawmaker Taku Yamamoto, head of the party's panel on natural resources and energy strategy. "But under the law ... it cannot be put through bankruptcy. It must fulfill its role." FOOTING THE BILL Tepco, which has racked up net losses of $27.4 billion since the disaster, has cut its costs and raised its prices, but its long-term sustainability remains in doubt. It has yet to win local support to restart its Kashiwazaki Kariwa nuclear plant on Japan's northwest coast, some 200 kms from Fukushima - which could save it about $1 billion a month in fuel costs. Under the scheme crafted to keep Tepco afloat after the 2011 disaster, the company is liable for compensation, decontamination of affected areas and decommissioning the reactors. It is supposed to use electricity revenues to pay for decommissioning, while, for compensation and decontamination, it can borrow up to 5 trillion yen from the state-backed Nuclear Damage Liability Facilitation Corporation. "Our company would like to fulfill our social responsibility by properly compensating those affected by the disaster and decommissioning the reactors," Tepco said in response to Reuters queries for this article. "If the option of corporate bankruptcy or other court-led restructuring were chosen, there is concern that those affected by the nuclear incident would not be properly compensated and there might be a large impact on financial markets," it said. With cost estimates for compensation and decontamination at least double the 5 trillion yen credit line, and projections of the cost of decommissioning starting at 1 trillion yen, critics have long said Japanese citizens would end up paying the bill. But putting Tepco into bankruptcy would make that inconvenient truth all too clear. "Who would take over the clean-up and paying the people of Fukushima?" said the LDP's Yamamoto. "It would be the government. It would be tax money. And we don't know how much that will cost." "ECONOMIC INCENTIVE" Tepco's bankruptcy could also trigger potential chaos in the corporate bond market, a key source of funds for power firms, though the utility's short-dated bonds due this year trade near par for now, reflecting investor confidence they will be paid. "At the end of the day ... the government has a social need to keep Tepco running," said CV Ramachandran, head of Asian business for restructuring specialist AlixPartners. "If it wanted to wind-down and replace Tepco with another entity, that would have a major impact on Tepco bonds and potentially the Japanese bond markets. But this scenario is not likely." Rating agencies, too, said the government was unlikely to risk market upheaval by pushing Tepco to the wall. "With over 4 trillion yen ($40.2 billion) in (Tepco) bonds outstanding, the Japanese bond market would suffer a negative impact if Tepco were to default on its payments; we believe the government has an economic incentive to avoid such a scenario," said Standard & Poor's analyst Hiroki Shibata. Tepco shares have more than doubled this year to 512 yen each, but are still just a quarter of what they were worth before the 2011 disaster. A Tepco bankruptcy would also require clarifying the future shape of Japan's electricity sector, now controlled by 10 regional monopolies, but set to be liberalized under a law the government aims to pass this year. That would create a national power grid by 2015, and split the regional utilities into generation and transmission firms by 2020. Key details have yet to be worked out, making it hard to value Tepco's good assets. The government is also re-doing its basic energy plan, setting out the role of nuclear and other energy sources even as it tries to restart some of Japan's 50 reactors - which used to provide almost a third of the nation's electricity but are nearly all now off-line - in the face of public safety concerns. "The government would immediately need to present an overall plan for Japan's energy future, which would be almost as difficult to do today as it was in 2011," said Martin Schulz, a senior research fellow at Fujitsu Research Institute. Still, the growing criticism of Tepco has bureaucrats and politicians searching for some solution. "We must avoid a situation in which Tepco fails, so ultimately the government will have to step in and take on the burden," said Koichi Hagiuda, an LDP lawmaker close to Abe. Splitting off the Fukushima project without forcing the Japanese mega-banks that hold its bonds and have extended loans to take a hit, however, would be politically touchy. "No one will accept putting a huge chunk of money into Tepco just so bondholders and pensioners get a soft-landing," said Jun Okumura, a former industry ministry official and now a senior adviser for Eurasia Group. All of which suggests the government may shy away from drastic change, and continue to drip-feed in more funds. "On the surface, the government says it will 'take responsibility', but this is just a temporary expedient of using tax money," said Shigeaki Koga, a former trade and industry ministry official who proposed putting Tepco through bankruptcy in 2011. "They probably don't really intend to take responsibility." (Additional reporting by Mari Saito in TOKYO and Umesh Desai in HONG KONG; Editing by Ian Geoghegan) ==================== In a sign of reforms to come, newcomers snap at heels of Japan's utilities Sat, Sep 14 20:31 PM EDT image 2 of 2 By Aaron Sheldrick TOKYO (Reuters) - The Fukushima nuclear disaster is driving one of Japan's biggest industry overhauls since World War Two, as new, nimble (Quick, light, or agile in movement or action)suppliers take business from the big regional power monopolies, and manufacturers, from steelmakers to drinks firms, generate their own power and sell what they don't need. The 10 powerful regional utilities, which still supply around 90 percent of Japan's electricity - even with the country's nuclear industry virtually idled since the 2011 disaster - are expected to be broken up into separate power generation and distribution companies anyway by 2020. But the world's worst atomic crisis in a quarter of a century has accelerated the pace of market reforms, as a growing number of firms armed with new technologies, flexible payment options and, often, cheaper power invade traditional markets. Tokyo Electric Power Co (Tepco), the operator of the Fukushima facility, and the other major utilities have lost thousands of accounts in the 30 months since the plant was crippled by a massive earthquake and tsunami, as businesses switch to cheaper alternatives, a Reuters survey shows. "Until recently, everyone just assumed that if you put a plug in a socket electricity would come out. Most people had no idea of the structures behind that," said Hiroaki Ikebe, president of Ennet Corp, Japan's biggest independent electricity supplier. But the Fukushima disaster, he said, prompted people to ask how the power supply system works, how fees are calculated, what services are available, and how this compares with other countries. While the big utilities still dominate the market, Fukushima exposed shortcomings in power distribution, and the increasing competition is likely to push prices lower and shrink their market share. With energy companies' public image shredded in the wake of the Fukushima crisis, the government is to press on with opening up the market and reducing some of the highest electricity costs in the world. But change won't be easy as the utilities are politically well-connected and have resisted liberalization attempts since the 1990s. The reforms, set to go to parliament when it resumes next month, aim to create a national grid company in 2015, and break up the monopolies into generation and transmission firms by 2020, and abolish price controls. GAINING POWER Ennet has doubled its customer base to 15,000 in two years by offering cheaper prices and more flexible contracts, overtaking Japan's smallest monopoly, Okinawa Electric Power Co, in terms of electricity supplied, Ikebe said. The independents not only undercut the monopolies by accepting lower profit margins, they also provide power management systems and flexible buying plans to reduce prices and save energy. Many also trade electricity and use plant and infrastructure paid for by other firms, so they don't have to recoup those costs. Tepco, Kansai Electric Power Co, Chubu Electric Power Co and the other regional monopolies have lost close to 18,000 customers since around the time of the Fukushima disaster, figures provided by the companies to Reuters show. "We assume customers with smaller demand are likely to switch to the new electric power companies," said Naoko Iguchi, a spokeswoman at Kyushu Electric, which lost 340 accounts in April-June - more than double the number in the previous 12 months - as it raised tariffs to cover higher fuel costs while its nuclear reactors are shut down. Tepco has been hardest hit, losing 11,550 customers as it raised its prices by 10-17 percent. That's more than half the number of accounts it has lost since 2000, when Japan last tried to open up the market to competition. With its only remaining viable nuclear plant - the Kashiwazaki Kariwa facility in Niigata prefecture - still shut, Tepco has said it may have to increase prices again to bolster its finances. The utility has racked up net losses of $27.4 billion since the Fukushima crisis 30 months ago. A spokesman said Tepco offers energy savings plans to try to stop defections from its almost 29 million customers. Chubu Electric last month broke an unwritten rule among utilities not to stray onto each others' turf by buying control of Diamond Power Corp, a Tokyo-based independent electricity supplier. Chubu Electric, Mitsubishi Corp, the seller of the Diamond Power stake, and Nippon Paper Industries Co will also build a coal-fired power station near Tokyo to supply Diamond Power. PAPER POWER Nippon Paper, Japan's No. 2 paper producer by sales, is also branching out on its own. It registered last year to be an independent electricity supplier to sell excess in-house generated power, spokesman Koji Yoshino said, and plans to build power generation facilities in its factories around Japan, including a 110 MW coal-fired plant in Miyagi prefecture, north of Tokyo. The company has used biomass and solar power in three other locations, Yoshino said. Others have followed suit, with more than 100 companies registering with the government as of Friday to become power producers and suppliers. Manufacturers and others are also setting up in-house generators to produce electricity and cut costs as the big regional utilities hike prices - further eating into the monopolies' market share. "We realize competition is going to get fierce," said a spokesman at Kansai Electric, which this year raised its prices by almost 10 percent, and lost 1,050 customers in May-July. The number of locations licensed to generate 1 MW or more of in-house power rose 4.6 percent to 3,346 in the year to end-March 31, industry ministry figures show, with manufacturers from steelmakers to drinks firms getting in on the act. Asahi Group Holdings Ltd, Japan's second-biggest beverage maker by sales, spent about 1 billion yen ($10 million)to add a 7.8 MW gas co-generation unit at its Ibaraki brewery - inside Tepco's service area - that started in July. That, and other energy saving measures, will allow it to cut peak-time energy use across its eight breweries by about 40 percent compared to last summer, Asahi said. Kobe Steel Ltd, which generates power at its factories using blast furnace gas as fuel, has bigger plans. Japan's No. 3 steelmaker aims to build Japan's biggest inland thermal power plant north of Tokyo, a 1,400 MW gas-fired station. The facility will be supplied by gas from an expanded network planned by Tokyo Gas Co, Japan's biggest city gas supplier and one of three shareholders of Ennet. The others are Osaka Gas Co and a unit of NTT Facilities Inc. (Additional reporting by James Topham, Osamu Tsukimori, Leng Cheng and Guo Cheng; Editing by Ian Geoghegan) =====================