Swedish n-waste fund grossly underfinanced

Nuclear Monitor Issue: 

The Swedish Nuclear Waste Fund is showing a deficit of at least 30 thousand-million SEK (€ 3.4 bn), perhaps more. The deficit was turned up by a study group under the auspices of the Swedish Nuclear Safety Authority (SSM). It was to report its findings to date to the Government 31 May, but has now asked for a  one-year extension. The group strongly recommends tripling the fees producers of nuclear energy pay into the fund, from 0.02 SEK/kWh to 0.06.

The study, carried out in collaboration between SSM, the Nuclear Waste Fund and the National Debt Office, was commissioned in October 2011. The actual purpose of the study was to evaluate the need to revise the laws pertaining to the financing of Swedish nuclear waste management, but in the process the deficit and its implications became a major concern. The purpose of the extension is to allow time for a more global evaluation of the deficit and possible need to revise the law. The issues are intertwined. It would be wrong, they argue, to treat the issues separately. The new deadline is 31 May 2013.

In Sweden, all aspects of nuclear waste management – interim and final storage of nuclear fuel waste, the costs of decommissioning and demolition of nuclear reactors, the costs of regulatory authorities pertaining to nuclear waste management, and the entire EIA process surrounding plans for the final repository – are paid for through drafts on the Nuclear Waste Fund.

The balance of the Fund – 48 thousand-million SEK at present – is made up of the sums paid in by the nuclear power companies, based on a fee of 0.02 SEK/kWh. The fee is calculated on the basis of an expected reactor life-time of 40 years. The 0.02 SEK fee – raised by the Government from 0.01 SEK/kWh as recently as December 2011– is only half the rise recommended by the regulator in October of that year.

Management of the fund is closely regulated; investments are limited to government bonds, which currently offer very low interest rates. Low interest rates are one of two major factors behind the critical deficit. But essentially, the simple fact is that too little money is being paid in. There is no buffer, and Daniel Barr, vice-chair of the Nuclear Waste Fund and head of department at the Debt Office, doubts that the specified guarantors will be able to fill the gap in any meaningful way.

Legislative background
The Swedish approach to financing follows the ‘polluter pays principle’; each company pays into the Fund according to the amount of waste its operations give rise to.  A memorandum issued by the SSM in 16 May, recalls two key passages in the documents surrounding the two laws in focus here:

“The aim of the financing system shall be, to the extent possible, to minimize the risk that the government will have to assume the financial responsibilities that the law assigns to the concession holders [owners of nuclear reactors]” (Government Bill 2005/06:183 p 21); and

“The fundamental principle for financing of nuclear waste management is that the nuclear industry – not the tax-payers – shall cover the costs” (SOU 2004:125 p 9).

The memorandum also points out that the financial responsibility extends up to and through the final closure of the repository, whether or not nuclear energy is still being produced in Sweden. Finally, Swedish law authorizes the government to require the companies to specify guarantors that will step in, should the companies be unable to meet their financial responsibilities.

Sveriges Radio reports that the nuclear industry – where government-owned Vattenfall is a key player – reacted strongly to the recommendation of a 0.06 SEK/kWh fee, which would cut deeply into the companies’ profit margin and thus make them less attractive to investors.

The Government’s reception of news of the deficit has been cool. Questions have been raised as to whether the mandate of the study group actually extends to the issue of the Fund’s balance. Minister for the Environment Lena Ek told news reporters at Sveriges Radio that she would prefer not to raise the fee until 2014, the next regularly scheduled opportunity to adjust the fee. (The Government can, however, adjust the fee whenever it deems necessary.)

The day after the SSM requested the one-year extension, Daniel Barr, warned: “Unless the nuclear operators’ fees are raised, Swedish taxpayers will have to foot the bill for managing nuclear fuel waste.” Which would amount to substantial subsidization of nuclear energy on the part of present and future generations.

Sources: SSM  Request for postponement, 10 May 2012 (SSM 2011-4690-3) (in Swedish only),
MKG  Regeringen höjde inte kärnavfallsavgifterna lika mycket som SSM ville. www.mkg.se. News release posted 22 December 2011, SSM  Memorandum 16 May 2012: Nuclear waste fee for reactor owners (SSM2011-153-25) (in Swedish only), Sveriges Radio, Ekot 31 maj 2012 (morning radio news), Sveriges Radio, Ekot 1 juni 2012 (morning radio news
Contact: WISE Sweden, Charly Hultén
Email: inotherwords[at]telia.com

WISE Sweden