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    "Nuclear companies are not going to pay the 2 billion cost overrun for waste storage facilities."

    November 30, 2022 - CE Noticias Financieras


      After a lifetime working in the nuclear sector on the ground and in international organizations, he now faces a key moment for the industry at the head of the industry's employers' association. Nuclear power plants are facing the total shutdown with the upcoming staggered closure of all plants and are preparing for a more than likely clash with the Government over the bill to dismantle the plants and the management of radioactive waste.

      Ignacio Araluce (San Sebastian, 1955), president of Foro Nuclear for the last five years, finds it difficult to be crystal clear about the interest of the big electricity companies in extending the life of the nuclear power plants beyond the closure dates agreed with the Government ("they have no objection", "they are not opposed"...). They may be interested, but only if the Executive guarantees them profitability with some kind of stable retribution or fixed income, and also with less taxes. And it warns the Government -this one or the next one, whatever color it may be- that it cannot take long to decide: if they want to postpone the closure of Almaraz planned for 2027, the decision must be taken in 2024.

      Right now, according to the agreement between the Government and the electricity companies, all the nuclear power plants will be closing between 2027 and 2035. But, according to the electricity companies, when should the Spanish nuclear power plants 'close'?

      We have an agreed script and I cannot get out of the script: the seven reactors will continue to operate until 2027, and from that year they will gradually close down until 2035. As a consequence of the energy crisis, there are now many voices -which were not heard before, but now they are- that are betting on the continuity of the life of the seven units we have. And not only that, but there are also voices saying that more plants should be built.

      "Nuclear power has become a political weapon. And this is not politics, it is energy that we all need."

      If we combine the energy crisis - not only security of supply but also price crisis - and the need for a transition to sustainable and carbon-free energy to combat climate change, the logical thing to do is to give value to all the energy assets that are already working today. The logical thing to do is to maintain all the energies that provide stability to the electricity system.

      Do the companies that own the power plants (Endesa, Iberdrola, Naturgy and EDP) 'want' to extend the life of the nuclear plants? Because publicly they do not say so.

      The owners of the nuclear power plants have no objection to extending the life of the plants, but only under certain conditions. The first is that the Government reviews the National Integrated Energy and Climate Plan (PNIEC) until 2030 and that there is a change in energy policy on what the energy mix of the future should be. If not, the companies can do nothing.

      The owner companies can consider the continuity of the nuclear power plants if they are assured of a reasonable profitability, if they are assured of a remuneration that covers the costs of the plants and the investments that must continue to be made to continue operating, and that allows the recovery of future investments. This is absolutely logical. In order to continue operating, plants have to request an extension of the operating license, normally for ten years, and this implies a long-term commitment. The way the energy sector is, in order to acquire this long-term operating commitment, you have to be assured of a reasonable profitability. We do not want ups and downs. We need security and stability of prices and revenues, and we need to be assured that there will not be higher tax burdens.

      The Government has to review the PNIEC next year and draw up a new roadmap of which technologies will be used to produce electricity until 2030, and it will have to have contacts with all the energy sectors. Are the nuclear companies going to ask openly in those contacts to extend the operating years of the plants?

      This is not a race to see who takes the first step. It should be something consensual. But what is clear is that the responsibility for energy planning lies with the government, not with the companies. The owner companies are not opposed to the continuity of the plants, but if they say they want to continue with the plants and the Government says no, there is nothing to do.

      Why does it seem to be difficult for the nuclear companies to make public their position on whether to extend the life of the plants or not?

      I am making it public now.

      It is not the same to say that we have no objection to extending the life of the plants than to confirm that we really want to do it.

      "Nuclear plants will consider their continuity if they are assured that they will be profitable".

      We want to continue with the operation of the plants. There are assets that are already in operation, that generate more than 20% of the electricity in Spain, that give stability to the electricity system, that always work at 100%, that do not emit CO2, that are very competitive from the economic point of view (we have limited the sale price to 67 euros per megawatt hour, and the taxes and the waste tax they pay reach 25 euros), that give energy independence... If we have these assets in operation in the middle of the energy crisis, let's keep them. The companies want them to be maintained, but with conditions in which it is possible. It is not possible to maintain assets in the long term without an assured remuneration. A reasonable remuneration, nobody wants very high prices.

      And what formula does the sector demand to guarantee this income? A guaranteed profitability like the one that regulated renewables receive?

      Why not? It is an option. What we are asking for is to ensure a stable remuneration for the future and to reduce tax burdens, because we are paying more than other energy producers and with redundant taxes.

      Nowadays, the debate about the 'profits falling from the sky' of the electricity companies is very present, but in the specific case of nuclear power plants, this complaint has been very present for years.

      There is a lot of talk about profits falling out of the sky and that the companies are getting rich with high prices. But with high prices the companies' profits fall in Spain, because they have to cover more electricity demand than they produce and they have to go to the market and pay for energy at those prices. High prices are in nobody's interest.

      The nuclear plants are selling their electricity at less than 67 euros per megawatt hour by law, because if it is sold above that, the difference has to be returned. The plants have sold all the energy they produce for this year, for 2023, 80% of the production of 2024, 50% of that of 2025... and they sell it at fixed prices and below that limit. And, at the same time, nuclear power plants pay taxes and fees that add up to 25 euros per megawatt hour, so they take almost 40% of the income. And with the rest we have to cover the cost of fuel, personnel, contractors, components, the investments that we have to continue to make (we invest 200 million every year in the seven reactors just to maintain them) and to recover past investments. There is no margin. Where are the profits falling from the sky?

      In recent months it has been PP, Ciudadanos and the ultra-right wing of Vox, and also some industrial employers, who have openly asked to review the closure schedule. Are others being allowed to put pressure while the nuclear companies remain silent?

      The companies are not interested in continuing with the plants if they are not economically viable. What we need is to be assured of a stable return, the recovery of investments and that tax burdens will not be increased. And we don't hear that clear message from anyone. For someone to just say that they want the plants to continue operating for 50, 60 or 80 years does not mean anything. Nuclear power has become a political weapon. And this is not politics, this is energy that we all need. Some are against this technology and some are for it. But being for or against must be reasoned. Those who are in favor of nuclear must also say that, in order to maintain it, regulatory conditions must be established to make it viable.

      Some criticize this current political pressure as opportunistic. Taking the decision to extend the life of nuclear power plants, in principle, does not seem to be one of the urgent measures to solve the problems of this energy crisis.

      This is a mistaken vision. The decision to stop or continue with a nuclear power plant is not made in a day. A plant has to have a shutdown or operation forecast several years in advance. You have to stockpile nuclear fuel, you have to seal agreements with contractors, with component suppliers, you have to establish an employment policy... The Almaraz plant is scheduled to close in 2027, and you cannot change its position that same year to continue operating. It has to be decided about three years in advance, so in order to continue with the Almaraz plant, a decision has to be made in 2024. The fact that it is not urgent is very nuanced, we have a year and a half or two years more or less if we want it to continue operating.

      "The extra cost of the waste will have to be charged to the electricity system or to the budget through taxes".

      France, the great European nuclear power, is having problems due to the shutdown of more than half of its reactors. Does this situation undermine the image of stability that nuclear power wants to convey?

      In Spain we don't have these problems. It is a specific French problem. On the one hand, because of the delay in the usual maintenance of the nuclear power plants due to the pandemic, while in Spain it was decided that the maintenance would continue exactly the same but extending the times so that the personnel would not coincide due to the anticovid protocols. On the other hand, due to a very particular manufacturing problem of some components of the power plants in France, not even the design but the manufacturing.

      The fact that the shutdown of half of the French fleet coincided with the energy crisis has provoked two opposing reactions. Some denounce that nuclear energy has left the French people stranded at the worst moment and cannot be trusted. Others believe that this situation shows that nuclear energy is absolutely necessary because of the consequences of shutdowns and that the French nuclear program must be strengthened to maintain energy independence. The latter is the position of the French government.

      The position of the Spanish Government is different and it is very clear: there is no intention to change the timetable for plant shutdowns.

      Often positions change due to circumstances. It is not possible to have the same position on a transcendental issue such as energy in some conditions as in others. In fact, after Russia's invasion of Ukraine, the position of many countries has changed. Countries that were not betting on nuclear energy in the future are now doing so. The positions should not be absolutely extreme either, they have to adapt to the situation. We will see.

      The Government has just approved the final version of the new General Radioactive Waste Plan (PGRR), subject to the opinion of the CSN. The Executive has opted for seven temporary storage facilities, one at each plant, which was the option that the nuclear sector liked least in principle.

      The decision on how to manage radioactive waste in the future is a State responsibility and it is the State that has to define it. The only thing we nuclear power plants do is to finance it, to pay for it, which is no small thing. The logical thing would be for all the plants to have temporary storage facilities where 100% of the spent fuel would fit and the waste would be there for as little time as possible in order to free the sites where the plants are located as soon as possible. How? By accelerating the deep geological storage (AGP), because the GRWP contemplates that in 2040 the location should already be decided and how the final waste storage facility should be, but it is not expected to start operating until 2073. If it already has to be designed and with social consensus in 2040, why don't we put it into operation in 2050 and not in 2073? Moreover, this is what the European Commission recommends.

      The new PGRR contemplates a billionaire cost overrun in relation to the previous versions. And, as you said, the ones who must finance it are the nuclear power plants themselves to pay for the decommissioning of the plants and waste management.

      "Just because someone says they want the plants to operate for 50, 60 or 80 years doesn't mean anything. To maintain them, they must be viable."

      The option chosen by the Government in the latest version of the Plan implies a cost of 2,000 million euros more. This cost overrun is due to the delay caused by the failure to reach a consensus among the institutions on how to manage waste. And this is not attributable to the nuclear power plants, which are not responsible for the fact that the institutions did not reach an agreement. Why do we have to pay this extra cost if the responsibility lies with the Administrations? The government can decide whatever it wants on how to manage the waste, but the nuclear power plants are not going to bear the additional costs of the storage facilities.

      We are willing to pay what was foreseen in the agreement we reached in 2019 to set a schedule for the closure of the plants, and which involved a rise in the fee we pay to Enresa [the public company in charge of radioactive waste management] from E6.70 per megawatt hour produced (MWh) to almost E8. We are committed to cover these costs, but we are not going to bear the additional cost because the Administrations do not agree. This cost overrun will have to be charged as electricity system costs or in the budget through taxes, but not to the nuclear power plants.

      If they are charged as electricity system costs, the extra 2,000 million will go to the electricity bill paid by all consumers.

      Indeed, they would go to the bill. That is for the Government to define. The Government should decide how it is going to cover these costs, but it should not charge it to the power plants.

      The Government understands that the law enables it to apply new increases in the Enresa rate if necessary to cover the costs, even if a maximum increase of 20% is agreed in 2019 with the electricity companies and then a rise of more than 19% will be applied.

      What credibility, what reliability, can have some institutions with which you reach an agreement to assume some costs and then they tell you that they can charge you an extra cost for which you are not responsible. There should be no increase in fees. Noshould be a possibility. We do not contemplate paying this extra cost because it is not logical. I am not going to get into legal and tax issues, for that there are lawyers who know much more.


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