Switzerland faces potential shortfall in decommissioning funds

15 August 2013

The Swiss government has proposed changing the way it calculates utility contributions to a fund for nuclear decommissioning and waste disposal. The changes, which could be implemented from mid-2014, could lead to "significantly higher" costs for nuclear plant operators.

The cost for decommissioning and radioactive waste disposal from Switzerland's five nuclear reactors was estimated at CHF 20.654 billion ($22.455 billion) in 2011. However the Department of the Environment, Transport, Energy and Communications (DETEC) has warned that without changes to the financing model there could be a potential shortfall. It said that adjustments are necessary due to the "increased costs" for nuclear plant decommissioning and radioactive waste disposal, and the "lower expected returns in financial markets."

Annual contributions to the decommissioning and waste funds are currently calculated using a mathematical model, based on a service life of 50 years, an investment return of 5%, an inflation rate of 3% and a real interest rate of 2% per year.

DETEC is proposing reducing the investment return value from 5% to 3.5%, the inflation rate from 3% to 1.5% and adding in a 30% 'safety margin' or uncertainty allowance to the estimated cost.

It said that cost studies carried out in 2001, 2006 and 2011 have shown that the average cost increases were around 4.8% a year - higher than the assumed inflation rate of 3%. It also said that the desired 5% return on investment was not achieved in the two funds.

If implemented, the proposed changes would lead to "significantly higher" contributions from nuclear plant operators, DETEC said. In the case of Muheleberg, BKW said its contributions would double from CH300 million ($320 million) to CHF600 million ($640 million) between 2012 and 2022.

BKW said that the uncertainty allowance was "unnecessary and unreasonable," and that it "does not take account of potential technology-related cost reductions." It said that uncertainties and new insight are taken into account as part of a cost estimates carried out every five years. The next estimate is due in 2016.

DETEC said that a consultation on the proposed changes is due to be launched in August.

Photo: Switzerland's Mont Terri underground research laboratory (Source: Nagra)

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