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Kansai Electric Power Company said the thickness of the pipe, which ruptured and spewed out non-radioactive steam on Monday, was way below legal minimum safety standards.
"We conducted visual inspections, but never made ultrasonic tests, which can measure the thickness of a steel pipe," spokesman Haruo Nakano said.
The broken pipe, which was 10 millimetres (four tenths of an inch) thick when installed in 1976, measured just 1.4 millimetres -- way below the legal minimum safety standard of 4.7 millimetres, he said.
"We are responsible" for slack management of plant inspection data, said quality control manager Koji Ebisuzaki in a briefing to reporters near the plant in Mihama, 350 kilometres (220 miles) west of Tokyo,
The pipe "showed large-scale corrosion at the area in question," Kansai Electric said separately in a statement.
Among the seven also injured in the accident, two men were were in critical condition.
One workman, who had 80 percent burns, was unconscious and breathing with a respirator, a Tsuruga Hospital official said.
Akira Kokado, the deputy plant manager, told reporters that Monday's accident had hurt public confidence in both nuclear power and Kansai Electric.
"We hope to restore confidence by probing its cause and reviewing plant inspection procedures and data management," he said.
Fukui police said about 100 officers were on the scene gathering evidence for their investigation. Japanese police automatically look into whether there is a case for bringing charges of negligence leading to death when a fatal accident occurs.
The government's Nuclear and Industrial Safety Agency also said its probe would focus on the thickness of the wall of the ruptured water pipe that was connected to a steam turbine.
"I think the probe will focus on whether the pipe's rupture was caused by the pipe walls being too thin," said Michio Yamaguchi, an official at the agency's inspection division.
"We have not come to a conclusion but it is one of the possibilities," he said.
Satoshi Fujino, a spokesman for the Citizens' Nuclear Information Center, an independent anti-nuclear group, blamed cost-cutting for the failure by Kansai Electric to inspect the pipe adequately.
"We should view this accident as the harmful result of the pressure to cut inspection costs," he said.
Environmental group Greenpeace issued a statement saying Japan's entire nuclear power program should be abandoned in the wake of the accident.
"Japan should mark this tragic event by closing its nuclear industry down," Greenpeace said.
It warned Japan could see more such accidents as the country's nuclear power plants grow older.
"Mihama was 28 years old. Most of the Japanese nuclear power plants will be nearing this age in the next five to 10 years," it said.
Japan is the third-largest nuclear power producer after the United States and France. Nuclear power accounts for more than 25 percent of its electricity supply, according to the Paris-based Nuclear Energy Agency.
Local papers on Tuesday also demanded a thorough investigation of the accident, with the business daily Nihon Keizai Shimbun saying it dealt a serious blow to public confidence in Japan's nuclear safety.
Japanese and French officials, however, said, Monday's accident would have no bearing on Japan's bid to host the world's first prototype nuclear fusion reactor.
Japan and the European Union are vying to host the 10 billion dollar International Thermonuclear Experimental Reactor, a test-bed for what is being billed as a clean, safe, inexhaustible energy source of the future,
"This is totally unrelated," Takashio Hayashi, a science and technology ministry official, said. "These are two completely separate things."
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