The German government has reached an agreement in principle on nuclear decommissioning with utilities that is expected to go into effect in February, Bloomberg reported, quoting a person with direct knowledge of the matter.
Utilities including RWE and EON would have to contribute a combined initial payment of €23.3bn ($25.8bn) that was proposed by a government commission in April, as well as interest, to release them from their nuclear waste storage obligations, the source said.
The decommissioning liability arises from the government 2011 decision to phase out nuclear power after the Fukushima disaster in Japan. The deal will provide investors with more clarity on the costs for utilities as incalculable risks resulting from the fuel that may be radioactive for 100,000 years has weighed on the companies’ shares, Bloomberg said.
“It appears that we are nearing the end of a long running saga,” John Musk, a utilities analyst at RBC Europe Ltd, said by phone from London. “At 23.3bn plus interest, it is within the realms of what people have been expecting and will remove one of the key risk associated with both these companies,”
Nuclear owners EON, RWE, Vattenfall and Energie Baden-Wuerttemberg have already set aside almost €40bn to decommission reactors, restore the land and dispose of nuclear waste. Nuclear power now accounts for about 14% of Germany’s electricity production, down more than 30% in 1999.
The draft law includes an option to make instalments until 2026 and the utilities will start contributing to the fund next year. The German cabinet is set to approve the law on 19 October. With a combined liability of about $16.7bn, E.ON and RWE will have to find most of the funds. E.ON has said it might carry out a share sale to raise about €2bn to help achieve this.
Under the deal, companies can transfer the funds in one lump sum on 1 January 2017, or in several instalments over the next decade. If utilities opt to pay in stages, their first payment must be a fifth of the total. They will have to pay interest of 4.58% a year on the remaining amount. Those utilities that decide to pay in instalments will also have to provide collateral for what they still owe, which could be via a bank guarantee, according to details of the draft law.
Meanwhile, Swedish utility Vattenfall is suing Germany at the Washington-based International Centre for Settlement of Investment Disputes concerning the closure of the Brunsbüttel and Krümmel NPPs in the wake of Fukushima. World Nuclear News reported that utility spokesman Magnus Kryssare had refused to confirm German media reports that the Swedish company is seeking €4.7bn in damages.