NAGOYA/TOKYO, Japan - Japan third-biggest power operator on Monday agreed to shut a nuclear plant until it can be better defended against the type of massive tsunami which in March triggered the worst atomic crisis in 25 years.
Compounding public concern over an industry that supplies about 30 percent of the quake-prone country's electricity, another nuclear power operator -- Japan Atomic Power -- said it had plugged a tiny radiation leak at its Tsuruga plant on the west coast -- the first since it started operations in 1987.
It said the leak had no impact on the environment.
The move to close Chubu Electric Power Co's Hamaoka plant, 200 km (120 miles) southwest of Tokyo and considered one of the quake-prone country's most at risk, follows unusually overt pressure from Prime Minister Naoto Kan.
The demand for its closure signals a potential shift in energy policy after the Fukushima Daichi plant in the northeast was wrecked by a giant tsunami triggered by one of the biggest earthquakes ever recorded on March 11.
The company said it could restart the plant once its tsunami wall and other safety steps had been approved by the authorities.
That could take two years, raising the risk of a shortage of electricity which is already a threat following the closure of the Fukushima plant.
"By halting the Hamaoka nuclear plant, we are causing great short-term trouble to not only those in the plant area but also many others including our customers and our shareholders," Chubu Electric President Akihisa Mizuno told a news conference.
"But firmly implementing measures to strengthen safety would become the cornerstone to continue safe and stable nuclear power in the long-term and in the end lead to the benefit of our customers."
The closure of the plant in central Japan risks discouraging manufacturers from building factories and hurting consumer sentiment.
Output disruptions may not be large enough to delay economic recovery because the utility could likely meet summer demand with thermal energy and electricity from western Japan.
But beyond the summer, the government has yet to articulate a clear plan for energy policy, which could encourage Japanese firms to move more production overseas and discourage private consumption.
"We can rely on thermal power in the short term, but this raises costs and emissions," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"In the future, we're not sure what the government wants to do. The longer that uncertainty about the power supply continues, the more companies will start thinking about manufacturing overseas."
Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting Co in Tokyo, does not see a turning point for nuclear power in Japan.
"But the decision to halt the Hamaoka plant is not based on a clear or legal standard and thus raises concerns about the risk of other plants being asked to halt operations," he said.
"The central Japan area has long been said to be prone to big earthquakes but will the government do the same if it finds another location as equally quake-prone? That is not clear. Kan's decision lacked a decision-making process to call it a policy turning point."
Chubu Electric's Hamaoka plant provides power to half of the 18 plants that make Toyota Motor Corp's vehicles in Japan, and all four of Suzuki Motor Corp's domestic car and motorcycle factories.
The coverage area also includes other auto plants including those of Honda Motor Co and Mitsubishi Motors Corp, but Toyota is most vulnerable given its heavy ratio of cars made domestically.
But uncertainty over how the resources-poor country plans to produce electricity in the longer term gives automakers another reason to shrink production volumes in Japan, where making money on exports is impossible at 80 yen to the dollar.
"This raises a question of how you're going to split your domestic and overseas production," said Koji Endo, senior analyst at Advanced Research Japan.
The government is under heavy pressure to review its energy policy, of which atomic power is a major part, after the March quake and tsunami wrecked the Fukushima nuclear power plant run by Tokyo Electric Power.
Nearly 26,000 people were killed or are unaccounted for following the natural disaster which triggered the world's biggest nuclear crisis since Chernobyl in 1986. The plant is still leaking radiation.
Government experts put the chance of a magnitude 8.0 quake hitting the Hamaoka area in the next 30 years at 87 percent, which has raised questions over why it was built there in the first place.
($1 = 80.630 Japanese Yen)
(Additional reporting by Ayai Tomisawa, Chang-Ran Kim and Stanley White in Tokyo; Editing by Jonathan Thatcher)