Complaints of crippling tax

28 September 2001

Vattenfall, Sweden’s largest utility, has warned the government that it may have to decommission older reactors prematurely if a tax on installed nuclear generating capacity is not rescinded. The tax took effect on 1 July 2001. It is based on a charge of 0.26USc/kWh for the electricity a nuclear plant could potentially produce over a year, rather than its actual production. Only after 90 continuous days offline can a utility apply for tax relief that allows a deduction for each additional day a unit is down.

Vattenfall Nordic production director Alf Lindfors said that the tax was so high that it negated any profit margin even when prices were normal. In a letter to the finance ministry he added that the tax accounted for 15% of Vattenfall’s total costs for nuclear power production, and 21% excluding capital costs. Finance minister Bosse Ringholm has publicly called the letter “blackmail.” Meanwhile, Swedish utilities have urged the government not to shut down Barsebäck 2 as planned. As part of the country’s phase-out programme, the government has said the 615MWe reactor will be shut down by the end of 2003. At the hearing on the country’s power industry Monica Ulfhielm, director of Svensk Energi utility group, said: “It would have serious environmental consequences and worsen the problem with power shortages in southern Sweden.”

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