Commission suggests financial arrangements for German phase-out

29 April 2016

An independent commission, the Kommission zur Überprüfung des Kernenergieausstiegs (KFK), set up in October 2015 by the German government, has recommended to the government that the reactor owners pay €3bn ($26.4bn) into a state-owned fund for decommissioning of the plants and managing radioactive waste. Germany plans to phase out nuclear power by 2022. The commission's purpose is to develop recommendations to ensure financing for the decommissioning the reactors and the disposal of radioactive waste so that the utilities involved are financially able in the long term to fulfil their nuclear obligations.

The commission presented its recommendations to the Ministry of Economics and Energy on 27 April. It suggests that for storing and final disposal of radioactive waste the necessary funds are transferred to the state as security. The companies will remain responsible for the remaining tasks - in particular the decommissioning and dismantling of the NPPs and the packaging of waste.

The commission says the utilities involved - EnBW, EON, RWE and Vattenfall - should pay €4.7bn to the state to secure the financing of interim storage, the production of repository containers for waste from reprocessing and the transport from the interim storage facility to the final repository. The companies will be wholly liable for carrying out these tasks. The utilities should also pay €12.4bn to the state fund to finance the selection, construction, operation and decommissioning of a radioactive waste repository.

The companies should also pay a "risk premium" of around 35% to close the gap between provisions and costs, KFK said. This brings the total expected from the utilities to €23.3bn and the payments could be made in stages over the next few years.

The commission recommended that closed reactors should be dismantled as soon as possible, rather than sealed for several years to allow the radioactivity to reduce naturally. It called for the government to make the process for obtaining decommissioning permits faster and more efficient. The Ministry of Economics and Energy said it will now examine the KFK's recommendations and consult with other government departments on actions that should be taken to implement them.

Vattenfall senior vice president for markets Stefan Dohler said: "We welcome that there has been an open and constructive dialogue with the nuclear commission and the companies concerned about the commercial and regulatory framework for the German nuclear phase-out. The proposals of the KFK appear to the four affected energy companies - and thus also in our view - in principle [to be] a feasible way to organize and finance the nuclear power phase-out." He said, however, the so-called risk premium is "disproportionate to the economic strength of the affected utilities".

"We will analyse the proposal of the commission, hoping to find a joint solution with the German government on how to tackle the still open issues," Dohler added. "We take responsibility for this process but can't offer financial solutions which are contrary to the given commercial and legal framework."

The four utilities said in a statement that they had been willing to accept a risk premium to enable a consensus, but that the suggested "huge" risk premium "overburdens" their "economic capabilities". They said they "cannot accept the suggestions as they are, least of all due to their responsibilities towards their employees, their customers and their shareholders".

The companies have already built up the necessary provisions for the nuclear phase-out. These amount to €40bn and have been approved by the government and the KFK "to be adequately and correctly represented in the companies' balance sheets". The utilities will make an in-depth analysis of the recommendations before making a final assessment.



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