With Japan's new government, nuclear energy may be back

Election victory celebrations in Japan are usually sober affairs: no booze, the obligatory "Banzai!" and the endearing habit of holding aloft a fresh sea bream, which is a good-luck charm and a tasty ingredient for soup to ladle out to supporters.

Not so on the Tokyo Stock Exchange. Jubilation at the landslide win of Shinzo Abe's Liberal Democratic Party (LDP) on Dec. 16 raised share prices to the rafters. The markets were celebrating a slide in the yen, which may make ailing Japanese exporters such as Sharp, an electronics firm, more competitive. There was also joy that Japan's "nuclear village" appears to be back in business. During earlier decades in power, LDP governments backed nuclear energy to the hilt, brushing aside worries about safety.

In the two days after the election the shares of Tokyo Electric (TEPCO), the owner of the Fukushima Daiichi nuclear power plant, surged by 56 percent. Investors bet that the new government would allow Japan's reactors, almost all of which have been idle since being struck by an earthquake in 2011, to restart.

That may be wishful thinking. Abe may want to steer clear of the sensitive nuclear issue until upper-house elections in mid-2013. If so, a time frame agreed with TEPCO's 77 banks for restarting the first of its seven Kashiwazaki-Kariwa reactors in Niigata prefecture may be missed.

TEPCO says each stalled reactor costs it $1.2 billion in lost profit each year.

Furthermore, the nuclear industry now has an independent watchdog, the Nuclear Regulation Authority, which is showing teeth. Its investigators have so far issued seismic warnings against two nuclear power plants, which may lead to their permanent mothballing.

By law, even an LDP government should be unable to boss the watchdog around.

Yet a share-price rally may still be warranted. TEPCO's share price is barely a tenth of what it was before the disaster.

That reflects a genuine fear that the company may go bust. Surely, investors mutter, the LDP remains chummy enough with Japan's nuclear utilities not to let any of them collapse into bankruptcy?