Summary of Comments Made at a Press Conference by Hiroji Ohta, FEPC Chairman, on February 18, 2000

Today I would like to discuss the effects of tax policy on the electric power industry, and give you an update on the accident at the JCO Tokai Plant.

Recently, Shintaro Ishihara, the governor of Tokyo, proposed a new "external standards" tax scheme for banks that do business in metropolitan Tokyo. Under the scheme, gross operating profits, rather than net earnings, would be subject to taxation. This proposal has stirred considerable debate, and I would like to take this opportunity to comment on how tax policies affect our own industry.

In addition to regular national and regional taxes, the electric power industry is subject to special electric power development taxes and nuclear fuel taxes. As a result, the industry as a whole makes a significant contribution to the nation's tax revenues.

In 1998, taxes paid by the power industry, including water and road utilization fees, totalled approximately \1.4 trillion, a figure that represents 9.2% of total sales. Compared with the average rate for all industries, which is 1.4%, this is obviously extremely high. If we look at the figures in terms of per-household electricity rates, we can see that for an average monthly electric bill of \7300, including sales tax, taxes account for approximately \900, or more than 10%.

Although the public is not generally aware of it, only the electric power, gas, life insurance and liability insurance industries are currently taxed on the basis of gross revenue. In effect, we are already subject to "external standard" taxation, which means that our tax burden is much heavier than industries that are taxed on the basis of net income. In fact, we pay approximately double what we would pay under a net-income-based tax scheme.

This clearly runs counter to the principle of "fair and equal" taxation, and for many years we have sought to have enterprise taxes on the electric power industry brought in line with other industries.

In addition to our fundamental objections to "external standard" enterprise taxation, we of the power industry are concerned that if it is applied only to some segments of the banking industry, it will lead to even greater inconsistency in how tax rates are applied to various industries.

As for the introduction of "external standard" enterprise taxation in all industries, there are those who feel that there is merit in a broad, shallow tax base supported by all corporations that benefit from roads, bridges, police and other public services. On the other hand, there are those who are concerned about the impact such broad-based taxation would have on efforts to revitalize the economy. I therefore believe that the implications of any changes in tax policy must be careful studied.

Although Tokyo's proposed introduction of an "external standards" tax proposal has stirred interest in tax policy, I hope that it will also stir debate on the meaning of "fair and equal" taxation for the electric power industry.

Next, I would like to comment on recent developments relating to the accident at the JCO Tokai Plant.

Four months have passed since the accident, which was the most serious in the nation's history. Response was quick, however, and by the end of last year, revisions were made to the Law Regulating Nuclear Installations, and a new Nuclear Emergency Law was proposed. At present, specific standards and regulations are being reviewed in preparation for the law's enactment in June.

In addition, the electric power industry took the lead in establishing the NSNet last December. This organization, whose purpose is to improve safety standards throughout the nuclear power industry, is comprised of 35 firms and research organizations involved in the nuclear fuel cycle.

The organization's first board of directors meeting was held on February 4. In addition to ironing out organizational details and accounting procedures, the following decisions were reached.
EMember-company peer reviews by nuclear fuel processors will begin next year.
ETop-level seminars will be held for member-company and research facility directors and senior management personnel.
EA 'Safety Caravan' will visit member companies and research facilities to conduct lectures, and gather and distribute educational materials.
EA website will be created.

The importance of NSNet activities was also recognized at the WANO Board of Directors General Assembly held in London in January. At the meeting, a motion to support the NSNet with the full experiential and methodological resources of WANO was passed.

I believe the NSNet Secretariat will make an announcement about proposed future activities as soon as plans are finalized. In the meantime, we of the electric power industry plan to offer our full cooperation and support to ensure that their activities bear fruit.

Earlier this week, President Aoyanagi of Sumitomo Metal Mining announced his resignation. It is my belief that he took this step because the Science and Technology Agency had revoked JCO's operating licence -- the most severe penalty possible under the Law Regulating Nuclear Installations -- and as the head of the JCO's parent company he felt deeply responsible.

Although a semblance of calm seems to be returning to the accident site, distrust and uncertainty are still felt by Tokaimura area residents who had shown their understanding and support for the peaceful use of nuclear energy.

For Sumitomo Metal Mining and JCO, the road ahead will no doubt be extremely difficult. But speaking as one who is involved in the nuclear power industry, I hope both firms will work together and do their utmost to regain the trust of area residents and the nation at large. Although this is only the first step in restoring that trust, it is essential to the restoration of public confidence in the nuclear power industry as a whole.