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German utilities buy out of nuclear waste liability for 24 billion euros

Germany's economy ministry and the country's four nuclear power station operators 鈥� RWE, E.ON, EnBW and Vattenfall 鈥� in late June formally agreed on how the disposal and storage of nuclear waste will be funded. Both parties signed that confirms how responsibility over managing the nuclear waste will be arranged.

It transfers obligation for disposing of the nuclear residues to the state while the operators are in charge of decommissioning and dismantling their nuclear plants as well as of safely packaging the radioactive materials. The arrangement had by a large majority within the German parliament (Bundestag).

The contract also says that the four operators have to pay nearly 24 billion euros into a fund for financing the intermediate and final storage of the nuclear waste , managed by the sate. Payments have to be completed by the beginning of July and the agreement will be legally binding for both parties, guaranteeing the operators "long-term legal certainty", . The final bill is the combination of a basic amount of more than 17 billion euros and an additional 鈥渞isk surcharge鈥� of 35.5 percent - more than 6 billion euros - to cover the contingency that costs exceed current projections, and that the return on capital in the fund is lower than expected.

The contract essentially implements the proposals unanimously agreed on by the , set up by the government in 2015. It was tasked with ensuring that the 鈥減olluter pays鈥� principle (see below) was upheld and the taxpayer wouldn鈥檛 end up footing the bill for nuclear decommissioning and waste storage.

At the same time the 19 members from government, industry and civil society were to secure the future survival of the four large utilities. A government stress test in October 2015 had increased worries that utilities would not be able to pay for the nuclear clean-up.

Difficult cost estimates

Estimating the costs for the nuclear clean-up is聽notoriously difficult, because it will likely last until the next century. Just finding, constructing and operating a final repository for highly radioactive waste could come in at anywhere between 10 and 70 billion euros. Decommissioning and dismantling nuclear power plants is estimated to add between 26 and 67 billion euros to the bill (See the CLEW factsheet Nuclear clean-up costs). Some of these undertakings will have to be paid for by the state, but for a large share of the clean-up, utilities who operated nuclear power plants (NPPs) are responsible.

Polluters pay - if they can

The 鈥減olluter pays鈥� principle and provisions in the nuclear power law and the German Commercial Code obligeE.ON, RWE, Vattenfall and EnBW (as well as some smaller municipal utilities which have part-ownership of some of the "Big Four鈥檚" NPPs) to put aside funds for dismantling and waste storage. By the end of 2014, the utilities had set aside 鈥� around their power plants and 16 billion for final storage.

But several developments have led to concerns about whether these provisions will be enough to pay for the nuclear clean-up far into the next century. There are also questions about whether the provisions made by utilities are safe and accessible. The issues are:

• Costs for decommissioning, dismantling, treating nuclear waste and storing it in a (still to be found and constructed) final repository might greatly exceed current estimates.
• The utilities operating nuclear power stations are struggling to adjust to a decentralised power system dominated by renewable energies. Their earnings from conventional power plants have plummeted and some wonder whether they will survive the current crisis intact (See this聽Dossier聽about the utilities鈥� fight for survival).
• The made for nuclear decommissioning and storage costs in like power stations. But the of these assets is uncertain, as the companies' market value has declined rapidly.
• E.ON has split itself in two, spinning off conventional power generation into a new company called Uniper in 2016. Swedish parent company Vattenfall made a when it with its subsidiary German Vattenfall GmbH in 2012. And RWE鈥檚 new renewables subsidiary innogy had its stock market debut in October 2016.

"Stress test" does not dispel doubts about聽nuclear provisions

Auditors at examined whether the utilities' provisions could cover the assumed cost of decommissioning on behalf of the energy ministry. But questions remained after publication of the results in 2015. Whereas the government and utilities said the calculations showed the companies had set enough money aside, the results also revealed the potential costs could well exceed current provisions .

Parliamentarians and researchers had for some years the utilities鈥� reserves as insecure and intransparent. The German Federal Court of Auditors (Bundesrechnungshof) in 2011 that the government lacked the expertise to judge whether provisions made by the utilities were sufficient, posing considerable risk to the federal budget.聽

Bettina Meyer and Swantje K眉chler, associates at 贵脰厂, made by the big four utilities by calculating how much each has put aside per kilowatt of nuclear capacity. 鈥淲hat worries us is that the amount ranges from ,鈥� Meyer told the 暗网福利app. She said it was also unclear why the companies came up with such different provisions assigned for decommissioning and waste storage ( below).

The 鈥減arents are liable for their children鈥� law

The government cabinet in 2015 that would enforce the nuclear plant operators鈥� liability in case of company restructurings. Minister Sigmar Gabriel calls it the 鈥溾�� law, with E.ON鈥檚 announcement to spin off its fossil and nuclear power operations and Vattenfall鈥檚 2012 restructuring in mind. Under current legislation, E.ON鈥檚 liability for the new company, Uniper 鈥� which was going to take on nuclear operations and their decommissioning, according to E.ON鈥檚 original plans 鈥� would end after five years.

the 鈥減arent鈥� liable indefinitely - that is, until the nuclear clean-up is completed, or the utility buys out of responsibility for waste storage according to the new pact - even if the company in question spins of its nuclear operations. Before E.ON鈥檚 shareholders ratified the company鈥檚 split in June, the cabinet officially reaffirmed its commitment to make the provision law.

A of the legislation was included in the nuclear waste pact the parliament decided on in December.