Federal Council Resolution Request Review of Insolvency Protection for Nuclear Exit Provisions

In today’s session, the Federal Council (Bundesrat) passed a resolution requesting the Federal Government to look into tightening insolvency protection for provisions made for closure, dismantling, and disposal related to nuclear power plants.

The resolution is a political declaration and legally not binding. It is based on an initiative from Schleswig-Holstein, Hesse,and Rhinland-Palatinate and covers the following items:

1. Polluter Pays Principle

Current nuclear power law is based on the polluter pays principle. Operators of nuclear power plants there have to pay for closure, dismantling, and disposal related to nuclear power plants. It needs to be insured that provisions made by nuclear power operators are based on realistic cost assessments. Furthermore, financing security is necessary, in particular availability of funds when they will be needed.

The Federal Government is therefore asked to commission independent cost studies, including potential cost increase. The Swiss decommissioning and disposal fund might serve as an example.

2. Increased Transparency

Transparency vis-à-vis financial and nuclear power authorities on provisions for closure, dismantling, and disposal  shall be increased for the four energy groups that operate nuclear power plants. This shall cover in particular

  • Provisions for each individual nuclear power plant in the balance sheet
  • Differentiated provisions for different obligations

Transparency obligations shall also apply vis-à-vis the general public.

3. Independent Verification of Provisions

The Federal Government – as requested by the Federal Audit Office 2011 – shall commission and independent review of the provisions for appropriateness and impairment losses. Should the provisions turn out to be insufficient, the Federal Government shall ensure that provisions shall be increased accordingly and establish additional criteria to asses the costs.

4. Instruments to Improve Polluter Pays Principle

The Federal Council reaffirms that the polluter pays principle shall apply to closure, dismantling, and disposal indefinitely. The Federal Council asks the Federal Government to assess suitable instruments to improve security of such obligations, and to coordinate a proposal for a Federation/Länder agreement.

5. Parent Company Liability

The Federal Council asks the Federal Government to assess in particular to what extent a legally binding obligation can be created that shall in the short term ensure insolvency protection for nuclear power operating companies regarding dismantling and disposal. As an example, the Federal Council suggests a statutory obligation to enter into a profit transfer and domination agreement or provide a letter of comfort from the group parent company for subsidiaries operating nuclear power plants. A key element of the assessment shall be how it can be ensured that in the case of an insolvency of a nuclear power operating company the respective parent group shall be liable for liabilities or losses indefinitely and without limit.

On this requirement, the Federal Council’s finance committee and the committee for environment, nature protection and nuclar safety in their recommendation noted that it is unclear whether this can be requested by law, and that a constitutional law review and, in the case of Vattenfall, a review for compliance with existing investment protection agreements  is necessary.

6. Exemption for Publicly Funded Operators

The Federal Council is of the view that nuclear power operating companies shall be exempted from the above obligations for their publicly funded reactors.

Source: Resolution Federal Council 280/14

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