More radioactive water could be spilled into the ocean from the earthquake-hit Fukushima nuclear plant, Tepco has warned.
Tokyo Electric Power Co warned that if there is a glitch in setting up a new decontamination system some of the 110,000 tonnes of highly radioactive water stored at the plant could spill out.
Two plant workers may have been exposed to radiation at more than twice the limit set by the government, the most serious case so far of exposure to workers.
Tepco has pumped massive amounts of water to cool three reactors where meltdowns occurred after the March 11 earthquake and tsunami disabled cooling systems.
Managing the growing pools of radioactive water is a major challenge with the start of Japan's month-long rainy season, and the plant, on the Pacific coast 240 km north of Tokyo, is running out of storage space.
"By sealing relevant areas we plan to prevent contaminated water from leaking into the sea," Tepco said in its report handed to Japan's nuclear regulator the Nuclear and Industrial Safety Agency.
Engineers have begun installing equipment supplied by French reactor maker Areva to decontaminate the radioactive water and Tepco wants to start operating it by June 15.
If the treatment system does not work, one of the reactors could run out of space to store contaminated water as early as June 20, and it could then spill into the sea.
The same could happen to a second reactor a day later, Tepco said.
Environmental activists have accused the government and Tepco of downplaying the risk of water leaks.
"This is a scenario that Tepco could have anticipated," said Junichi Sato, executive director of Greenpeace Japan.
"It is a serious problem that the firm has yet to take measures against this. If a big amount leaks continuously, then maritime contamination will spread even more."
In early April the utility dumped about 10,000 tonnes of water with low-level radioactivity into the ocean, prompting criticism from neighbours China and South Korea.
Tepco, criticised for its poor communication about radiation doses sustained by workers, also confirmed that two workers suspected of having exceeded the government's radiation exposure limit of 250 millisieverts had indeed surpassed that figure.
The unidentified workers were exposed to up to 580 millisieverts during cleanup efforts at the plant, Tepco official Junichi Matsumoto told a news conference.
Exposure to 250 millisieverts is equivalent to more than 400 stomach X-rays.
Health checks of the two have not shown any abnormalities, but experts say higher levels of exposure correspond to higher cancer risks.
Officials said it was possible that other workers had also exceeded the legal limit.
"We did not have a system in place to manage radiation risks as part of the early response," said Goshi Hosono, an adviser to Prime Minister Naoto Kan.