The electricity grid strategy and the national interest in the expansion of renewable energies, are the foundations laid by the Parliament for the implementation of the energy strategy and a strengthening of legal certainty. However, the expansion of protected areas and special zones proposed by the revision of the Nature and Cultural Heritage Protection Act (NHG) unduly restricts electricity production and distribution. It is thus not compatible with the federal government's climate and energy policy objectives. The bill illustrates the lack of a strategy on how to deal with the diverging interests between environmental protection and energy policy objectives and how to weigh them against each other in individual cases.
The ordinance on electric lines (LeV) already provides for measures to protect large birds from collisions with power lines and electric shocks. The implementation of these regulations is specified in a document that the branch has drawn up together with authorities, environmental organizations and science. The present modification of the ordinance is intended to strengthen the protection of birds. Axpo is requesting that the revision of the LeV be submitted for consultation together with the revised branch document. This is the only way to ensure a careful assessment.
In amending the Energy Act, the Federal Council aims to introduce greater incentives for the expansion of renewable energy sources in Switzerland. Axpo fundamentally welcomes this approach. But the planned investment contributions are not suited to investment in urgently needed large-scale plants. Therefore, Axpo is proposing the introduction of tender-based floating market premiums, which are already established in Germany and France. In addition, a risk guarantee would ensure that there is sufficient investment in the long-term preservation of existing hydropower plants.
Statement regarding WACC
The Electricity Supply Act (ESA) divides the electricity market into regulated areas and areas in which prices are set by the market. Use of the electricity grid is regulated. The tariffs that consumers can be charged for this are determined using the cost-plus method, which takes into account the legally recognised costs and includes interest on the capital invested. The regulatory interest rate is set as a WACC (weighted average cost of capital). The WACC method is also commonly used in other regulated areas, such as the promotion of renewable energies and basic supply.
The legally regulated interest rate level has received repeated criticism from consumers, as well as from the supervisory authority, especially in view of the negative interest rate policy at the macroeconomic level. The Swiss Federal Office of Energy (SFOE) is consequently discussing a reduction of the WACC. However, the federal agency is overlooking the fact that an adjustment to the WACC would not only put pressure on network costs, but would also reduce the returns and thus the profitability of investments in renewable energies. This would further reduce the incentive to invest in the energy transformation.
The gas market in Switzerland is still divided into supply monopolies. The so-called Associations' Agreement allows consumers, who are tiresome and very large, to choose their gas supplier freely and has not yet led to functioning competition. Axpo therefore welcomes the liberalisation of the gas market in Switzerland provided for in the GasVG, but consistently advocates a complete opening. Only in this way can the unequal treatment of market players be avoided and clear, good legislation be guaranteed without mixing different political objectives.
With an amendment to the Environmental Protection Act, the Swiss federal government intends to create the basis for new regulations on the prevention, control and monitoring of invasive alien species. Real estate owners will also be obligated to implement the respective measures. Axpo acknowledges that a regulation to combat invasive alien organisms is in the public interest and considers the proposed measures to be effective overall. The question of who bears the costs of implementing the prescribed measures must, however, be regulated in accordance with the polluter-pays principle. If no polluters can be identified and prosecuted, the costs should be borne by the cantons on the basis of their general control mandate.
The Energy Strategy 2050 provides for investment contributions for new hydropower plants and for the expansion and renewal of existing power plants. With the current revision of the ordinance, the Swiss government intends to create greater support, in particular, for the construction of new or the expansion of existing storage power plants. Axpo takes a critical view of this adjustment. The increase in investment contributions is too small to trigger the realisation of projects that have not yet been economically viable. Due to the continuing tense market situation and constantly increasing environmental requirements, the list of still profitable new construction and expansion projects is likely to be exhausted soon. In line with the energy strategy, the equalisation of replacement investments and the abolition of the previous distinction between new plants, extensions and renewals are also more effective objectives.
The SEFV regulates the modalities around two funds which ensure the financing of the decommissioning of nuclear power plants and the disposal of their radioactive waste. Axpo is critical of the partial revision, and, in particular, finds the planned reduction in the real yield to be incomprehensible. This is not only unnecessary, but also deprives the operators of important funds that would be necessary for investments in the future business and for the transformation of energy systems. On the other hand, Axpo welcomes the introduction of a more efficient recovery process and the renunciation of a general safety margin. These adjustments are both justified, accurate and were already discussed in the Administrative Commission prior to the revision.
The StromVG lays down the framework conditions for the electricity market in Switzerland. In principle it has been effective. Changes should therefore have as little impact as possible on the electricity market. Not all the revisions in the Federal Council's draft take this into account. The exchange of data and the division of responsibilities between ElCom and Swissgrid gives the TSO operator unjustified competitive advantages. The extension of the pre-emptive right to Swissgrid shares reduces their value and is impracticable. On the other hand, the bill does not create incentives for replacement investments or formulate measures to maintain Swiss hydropower plants.
For over a hundred years, water rates have been imposed as compensation for the use of hydropower as a resource. As a fixed levy, the amount of which is determined independently of the development of the electricity price, it no longer corresponds to the regulatory and economic framework conditions that have changed in the meantime. In order to strengthen the international competitiveness of Swiss hydropower and to guarantee the necessary investments in the long-term maintenance of hydropower plants, it is therefore necessary to make water ratesmore flexible.