Study for Greens: Transfer Provisions for Nuclear Decommissioning to Public Fund – No Full Exemption for Nuclear Operators

A study commissioned by the Green Party advises to transfer the provisions in the amount of roughly EUR 38 billion made for the nuclear exit liabilities by the nuclear power operators to a public fund within a period of five years, Rheinische Post (RP)  and several other newpapers report, referring to the yet unpublished document. Otherwise there was the risk that the provisions could vanish, the study reportedly says.

Following the Fukushima nuclear incident Germany decided in 2011 to reverse its decision taken less than a year before in 2010 to prolong nuclear operating times, using nuclear as a bridging technology on the road to an mainly renewable energy supply by 2050. Instead Germany decided on a fixed phase-out of nuclear energy by the end of 2022. Together with the fact that conventional power plants have come under commercial pressure as more and more renewable power is remunerated at above-market rates under the Renewable Energy Sources Act (EEG) and has to be transmitted with priority pursuant to the EEG, the earlier nuclear exit has put a considerable strain on the major utilities that still heavily rely on conventional power plants, including nuclear power plants.

Presently the nuclear power operators (E.ON, RWE, EnBW and Vattenfall) are undertaking efforts to restructure their businesses. In December 2014 E.ON announced to spin off conventional power and other activities and focus on renewable power, distribution networks and customer solutions. This prompted concern that the provisions for nuclear decommissioning and long-term waste disposal might not be safe. The operators have repeatedly rejected allegations that the reserves are not sufficient.

In March 2015 the Federal Ministry for Economic Affairs and Energy (BMWi) presented a study which concluded that factual as well as legal risks exist that financial provisions in the area of nuclear power made by the operating companies are not sufficient, and therefore, using a worst case analysis, it cannot be ruled out that the state sector might be faced with considerable costs for fully terminating the peaceful use of nuclear power including all follow-on costs. It furthermore stated that a reform option, which in its view was highly likely to be legally secure due to it being designable in a proportionate way, was a combination model of an internal fund and an external fund, under which the costs for the decommissioning and dismantling would be secured by an internal fund, and the costs for the disposal of radioactive waste would be secured by an external fund in the form of a public law foundation.

Already in May 2014 the heads of RWE, E.ON and EnBW reportedly voiced the idea to strike a deal with the government proposing to transfer the nuclear provisions to a public foundation and become in exchange exempt from decommissioning and waste disposal liabilities.

In May 2015 former Federal Minister for Economics and Technology and head of RAG Stiftung, Werner Müller, outlined his proposal for a public foundation and the concessions the utilities and the state would have to make. Besides transferring the provisions, Mr Müller also demanded that the utilities settle law suits brought against Germany in the wake of the nuclear exist.

At the beginning of July 2015 the newspaper FAZ reported that the government had commissioned a study examining whether the tasks and costs related to the nuclear withdrawal and long-term consequences are fully reflected in the provisions and if provisions suffice to cover decommissioning, dismantling, waste disposal and permanent storage costs. Results could be expected in autumn, FAZ said, quoting State Secretary to the Energy Minister Rainer Baake as saying.

As yet it is not clear if the ministry favours an internal fund combined with an external fund solution and how the external fund would be organised, e.g. as a public foundation, or only a public foundation model, possibly with a deal that settles all lawsuits relating to the nuclear exit as proposed by Mr Müller.

As regards an exemption of the nuclear operators from liability following a transfer of the nuclear provisions, the study commissioned by the Greens advises against. The authors Wolfgang Irrek and Michael Vorfeld of Ruhr West University of Applied Sciences (Hochschule Ruhr West – HRW) reportedly demand that the nuclear operators make additional payments in case the existing provisions do not suffice. Wolfgang Irrek is a professor for energy management and energy services, Michael Vorfeld teaches financial economics.

Source: Rheinische Post, Süddeutsche Zeitung, Reuters, FAZ

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