EU court supports Sweden's nuclear tax

5 October 2015


The European Court of Justice has ruled that Sweden's levy on the available power of reactors rather than the amount of electricity they provide. The court's seventh chamber decided that the tax does not fall within the scope of two European Council Directives and is therefore a national issue.

Sweden increased the tax by 17% in August and it now costs the nuclear industry about SEK4.6bn ($548m) a year, according to lobby group Swedenergy. The tax represents about a quarter of the total cost for nuclear production, Frank Kroenert, a senior consultant at Sweco AB, told Bloomberg. "The decision was expected," he said. "It's business as usual, though still under pressure. Reactors are still operating at the margin with the cost they have."

The tax was first contested in 2009 in the Swedish courts by EON SE's Oskarshamn nuclear plant, which requested a preliminary ruling from the EU. "Of course we are disappointed," said Jakob Holmstroem, head of press at EON's Swedish unit. "It was important to have the issue tried by a court and we stand firm by our position that the nuclear tax is a penalty tax that distorts competition." The EU ruling will now be sent back to the Swedish court for a final decision after taking evidence again from EON and the tax office. However, EU law takes precedence over Swedish law.

Shareholders in Oskarshamn operator OKG, meet on 14 October to decide whether to start decommissioning the NPP's two oldest reactors. EON owns 55% of OKG and Finnish utility Fortum Oyj most of the rest. While EON favours closing the units, Fortum does not. However, EON, as the majority owner, can decide on the closure.

"It's a tax burden for a business on its knees," Goeran Hult, head of nuclear power at Fortum in Sweden told Bloomberg. Fortum estimates it will take an estimated €700m ($780m) loss in the third quarter of 2015 because of the planned closures. Oskarshamn 1, a 473MWe boiling water reactor, began commercial operation in 1972 followed by the 638MWe Oskarshamn-2 BWR in 1975.

OKG owns and operates Oskarshamn 1, 2 and 3, which together account for 10% of total electricity generation in Sweden. The total production capacity of Oskarshamn 1 and 2, commissioned in 1972 and 1974, is 2511MWe, of which Fortum's share is 1090MWe. Fortum's share of the 1400MWe unit 3, commissioned in 1985, is 608MWe. Unit 3 will continue operation.



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