In an angry confrontation with executives at Tokyo Electric Power on Wednesday, Naoto Kan, Japan’s prime minister, demanded to know “what the hell was going on” at the utility’s critically damaged Fukushima Daiichi nuclear power station. He also delivered a warning: “If you abandon the plant, I guarantee Tepco will collapse.”

Tepco has not given up its desperate battle to cool overheated reactors and spent fuel tanks at the plant, which was spewing ever more dangerous levels of radiation on Thursday, six days after the 9.0 magnitude earthquake and resulting tsunami.

But even if it manages to bring the emergency under control, Tepco’s future looks bleak.

In the sort term, the utility faces severe difficulties keeping the lights on in Tokyo and the eight surrounding prefectures its serves – an economically crucial area of 44m people that consumes a third of Japan’s electricity.

The earthquake not only knocked out 10 of Tepco’s 14 operational nuclear reactors – six at Fukushima Daiichi and another four at the less-critical Daini plant nearby – it also damaged oil, coal and gas power plants accounting for 7m kW of power, roughly 20 per cent of Tepco’s thermal generating capacity.

Rolling power cuts and government pleas to save electricity have reduced consumption by about a quarter from the 41m kW average for this time of year. But Tepco is struggling to cope: supply was barely covering demand on Thursday, prompting Tepco to warn of possible uncontrolled blackouts in Tokyo.

“They are in a serious bind,” says Tetsunari Iida, executive director of the Institute for Sustainable Energy Policies, a research group. He blames Tepco and regulators for a narrow-minded focus on nuclear power generation.

Tepco faces even more daunting problems financially. Even in relatively un-litigious Japan, it will be sued, though awards by Japanese courts are rarely crippling. More serious will be the bill for repairs and the additional fossil fuels needed to make up its nuclear shortfall.

When Tepco’s seven- reactor Kashiwazaki-Kariya nuclear station was shut by a quake in 2007, it faced Y600bn in repair and conventional fuel costs that fiscal year – more than a 10th of revenues – driving it to its first net loss since the energy crises of the 1970s.

The Fukushima Daiichi station is a write-off and in any case is likely to be dangerously radioactive for a long time. The extent of damage to Daini is unclear. Even if repairable, prospects for restart are poor: the first reactor at Kashiwazaki-Kariya was not back on-line for 2½ years, and three of the seven are still awaiting approval to restart – permission that may not be granted now that nuclear power has taken a massive reputational hit.

Tepco’s own reputation is also at rock bottom and may not recover. It was already grappling issues of trust after several scandals and accidents: Kashiwazaki-Kariya was designed to absorb weaker seismic shocks than its area’s geology required, and the plant leaked radiation in the 2007 quake. In 2003, regulators closed all its reactors for a month after safety data were found to have been faked. In spite of the bravery of the 300 technicians at the Daiichi site – including the “Fukushima 50” who stayed behind after an evacuation on Tuesday – Tepco management has been censured for its handling of the emergency.

Mr Kan criticised its slowness in reporting a hydrogen-gas explosion that damaged the roof of the facility’s No. 1 reactor on Saturday, and questions are sure to be asked about why military fire engines were only called to the site on Thursday, six days after the crisis began.

The government and regulators will have to answer their share of questions too. Katsunobu Oanda, a journalist who has written a book about Tepco, says a dangerously cosy relationship exists between the utility and state overseers. “The regulator and the regulated are old classmates,” he says.

Both sides of what he calls “Japan’s nuclear power mafia” are motivated by a desire to defend atomic power from its critics. The result, he says, has been a closed and defensive corporate culture at Tepco, where managers focus on protecting themselves instead of the company – let alone the country

The issue for Tepco is whether it can survive this crisis intact. It has the weakest balance sheet in the global electricity sector with a debt to equity ratio of 228 per cent at the end of December, double the industry average. Moody’s, the credit rating agency, has put Tepco’s debt on review for a possible downgrade, and its shares have plunged 62 per cent this week. They would certainly have fallen more had it not been for daily loss-limits on the Tokyo Stock Exchange.

Possible scenarios include bankruptcy, nationalisation, and the separation of its nuclear business – or all three. Jesse Lentchner, Asia chief executive at BTIG, an institutional broker, predicts a halfhearted liberalisation of Japan’s electricity sector – which has so far done little to challenge Tepco’s regional monopoly – will gather pace. “I would guess that the power generation industry as we know it has come to an end,” he says. “Japanese electricity generation has been a model of uncompetitive practice.”