TEPCO's divestitute for reparation and resulting unbundling

We investigate a cash-out scheme for Tokyo Electric Power Company's (TEPCO) reparation for the Fukushima No. 1 Nuclear Power Station accident in the Great East Japan Earthquake on March 11, 2011. The scheme enables TEPCO to continue its service as a private company. As its balance sheets indicate that it has only a small amount of current assets, TEPCO must sell a large part of its power generation and transmission fixed assets to earn enough cash for its reparations, speculated to reach several trillion yen. We estimate the market values of TEPCO's thermal power plants and power network for their divestiture and examine concerns related to the divestiture. This divestiture will inevitably lead to the unbundling of the power industry. A "new TEPCO," established with unsold assets, will be engaged in operation of the power system and compensation of the losses by the accident following the "Chisso-Minamata" style reparation scheme. The entrants who purchase TEPCO's power generation and distribution grid assets will take over TEPCO's role in the newly established, decentralized, and transparent power market. Finally, we show how the charges formed in this power market can provide signals encouraging market entries and new business model creation.