Discussion about Nuclear Liability Foundation Gathering Momentum

The discussion on transferring provisions created by German nuclear power operators for nuclear power decommission liabilities to a state-owned foundation (Atomstiftung) is gathering momentum. Today’s Frankfurter Allgemeine Zeitung (FAZ) has an article with the headline “RWE on the way to becoming a state-owned group”, covering an upcoming presentation by Werner Müller. He is a former Federal Minister for Economics and Technology and since 2012 head of RAG Stiftung – which will finance perpetual mine management obligations related to coal mining.

According to FAZ, Mr Müller will discuss what the utilities and the state will have to offer to broker a deal. He is reported to be of the opinion that the solution to have a public foundation that deals with the nuclear exit would lead to RWE becoming a state-owned company. Mr Müller’s voice carries particular weight in this discussion. As head of RAG Stiftung, he is responsible to ensure that RAG Corporation can discontinue subsidised coal mining in a socially acceptable manner by the end of 2018, and from 2019 RAG Stiftung will be responsible for financing perpetual mine management obligations related to coal mining. Besides, he already negotiated the (first) 2002 nuclear exit amendment (Ausstiegsnovelle) in his capacity as Economics Minister under Chancellor Gerhard Schröder (unlike the 2011 nuclear exit the 2002 exit did not provide for a fixed deadline for nuclear power, but allocated production capacities to each plant).

1. Concessions by the Utilities

According to FAZ, Mr Müller is confident that a nuclear foundation could be set up, but sees the following concessions on the part of the utilities as essential

  • Information on the provisions in the amount of roughly EUR 38 billion, which the utilities made to cover the nuclear exit costs, in particular on the assets that cover the provisions and an estimate on profits from those provisions;
  • Willingness to transfer the provisions, respectively the assets covering them, and possibly further business potential;
  • Willingness to abandon the lawsuits brought against the German 2011 decision to withdraw from nuclear power (there are various lawsuits pending at various courts and arbitration courts).

The asset and business potential transfer may as a consquence mean becoming state-owned company for RWE, FAZ writes; currently Ruhr area municipalities would hold 25%. RWE would have to contribute assets in the amount of roughly EUR 10 billion while its stock exchange value is currently approximately EUR 13 billion.

2. Concessions by the Government

The main concession on the part of the government according to Mr Müller seems to be a state guarantee that the utilities are exempt from liability if they transfer the assets covering the provisions for nuclear power.

In the past Chancellor Merkel reportedly did not dismiss the idea of a nuclear foundation, but said the utilities must not pass on the risks on the Germany state.

According to FAZ, Mr Müller deems a state guarantee essential for setting up a nuclear foundation. Firstly he points out that such was also the deal in case of RAG Stiftung. Secondly, he asks if the government would not be well advised to agree to such a deal. If the affected companies became insolvent, the state would have to step in anyway. Thirdly he argues that state involvement was also justified by historical and social arguments. Lastly he points out that it was difficult to say whether the provisions of EUR 38 billion would be sufficient to cover costs, naming cost increases in the past and estimates by the head of the commission in charge of finding a permanent nuclear disposal site.

It will be interesting to see how much momentum Mr Müller’s presentation will bring to the debate.

Source: Frankfurter Allgemeine Zeitung

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