In its budget proposal on Wednesday, the Swedish government specified the rate at which it intends to reduce the output tax on nuclear power and the property tax on hydro power. These tax reductions are a part of the energy agreement concluded in the summer between a majority of the parliamentary parties. The government has now made a specific proposal for how this is to be implemented.
As regards nuclear power, the government aims to phase out the output tax in two steps. In July next year, the tax is to be reduced by 90 per cent from almost EUR 1,570 per megawatt and month to EUR 157. The tax will then disappear completely six months later, on 1 January 2018.
The property tax on hydro power plants is to be reduced in four steps on the basis of the government’s proposal, from the present 2.8 per cent to 0.5 per cent of the taxable value. The first step will be taken on 1 January next year, a reduction corresponding to 0.2 eurocent) per/kWh, bringing it down to about 0.7 eurocent/kWh.
The budget proposal is good news for Vattenfall, not least for nuclear power, where the special output tax is currently a great burden.
“The fact that the output tax is being phased out so quickly will have a positive impact on us. It is now completely in our own hands to become profitable and competitive, and I see good opportunities here. Among other things, this move offers good preconditions for making decisions on essential investments for a 60-year operational period,” says Björn Linde, Head of Vattenfall’s Swedish nuclear power plants in Forsmark and Ringhals.
Hydro power has also suffered from the burden of special taxes.
“Given that the property tax on our hydro power plants swallows up almost half our revenues from electricity generation, the government’s proposal is very positive. A reduction of this tax is quite simply a requirement if we are to be able to maintain our operations and make essential environmental investments at our hydro power plants in the future,” says Christer Ljunggren, Head of Vattenfall’s hydro operations.
The tax reductions will correspond to EUR 520 million annually in reduced costs for Vattenfall after they have been implemented.