Germany is willing to shield its utility companies from the risk of rising costs linked to the country’s nuclear exit, according to a draft report from a government-appointed committee seen on Monday.
The report recommends that Germany’s “big four” utilities — E.ON, RWE, EnBW and Vattenfall — transfer the provisions set aside to pay for interim and final storage of nuclear waste in cash to a government-controlled fund by 2022.
In addition, the committee has raised prospect of nuclear liability limit for utilities the possibility that the power companies remain liable for up to 36 billion euros ($40 billion) in costs for storage. Up to now the utilities have set aside around 18 billion euros for this.
Shares in E.ON and RWE both rallied as the commission’s proposals suggested it was willing to set a ceiling on how much they may have to pay to fund the nuclear exit.
The proposals give the utilities several years to transfer around a third of their total provisions, easing concern over how much their balance sheets will be stretched. It also removes fears that they could be made liable in perpetuity.
“It’s positive that the commission is recommending a fund for interim and final storage and allowing time until 2022 for cash funding,” Deepa Venkateswaran, a senior Bernstein analyst, said.
Industry sources said many details of the draft report — which is due to present in its final form at the end of the month — were unclear, while E.ON and RWE declined to comment.
Germany decided to phase out nuclear power in the wake of Japan’s Fukushima nuclear disaster in 2011, a move that plunged the utilities into crisis and raised concerns over whether they would be able to shoulder the shutdown bill.
Germany last nuclear plant will be shut down in 2022 and with utilities hit by a steep fall in wholesale power prices, there are fears that the cost could fall on the taxpayer.
The committee’s task is to figure out how to safeguard the nearly 39 billion euros in provisions set aside by the utilities to fund the dismantling and storage of waste from their nuclear plants, while also keeping the utilities viable.
The draft report recommends that the responsibility for dismantling the plants remains with the power firms and says provisions set aside to pay for this — which represent roughly half of the total provisions — should be kept in their hands.
Meanwhile, the state should take charge of the interim and final storage of nuclear waste by means of a government-controlled fund.
“Transferring the complete value of the assets in the form of all of the provisions would endanger the companies,” the report says.
In addition, the firms need to set aside a further 1.3 billion euros, the report says. The provisions also need to be made more transparent.
The committee has not made a final decision on the extent to which the utilities should remain liable for any follow-up costs, and it still plans to discuss this further. It is also weighing up a possible cut off point for liability when a final storage site is ready.