The cap has been one of the most contentious issues in the talks. Tepco and its creditor banks have argued for a limit on compensation, warning that without one Tepco's credit ratings could be cut to junk, making it impossible for the utility to raise funds, sources say.

The decision on who bears compensation costs will hinge in part on the interpretation of Japanese law, which states that a nuclear plant operator can be granted an exemption from paying damages if an accident was caused by "a grave natural disaster of an exceptional character".

Edano has repeatedly said he does not believe the accident at Tepco's Fukushima Daiichi nuclear plant should qualify for that exemption. On Monday he reiterated that stance and said Tepco should not be offered the relief of a payment ceiling.

I don't think Tepco has done much to deserve anyone's sympathy, so I say, bleed her dry!