Électricité de France shares sink to all-time low as nuclear waste cost estimate soars


By Geert De Clercq

PARIS, Jan 12 Shares in French utility Électricité de France S.A. [largely owned by the French state] sank to all-time lows on Tuesday after the country's Andra nuclear waste agency said that storage costs could be higher than EDF's estimates, although EDF disputed Andra's figures. Mirroring German utilities E.ON and RWE, which saw their shares hit decade lows late last year over worries about nuclear decommissioning costs, shares in EDF fell as much as 7.3 percent before closing down 4.4 percent at 11.96 euros. A string of brokerage price target downgrades and French forward power prices falling to new decade lows only added to the gloom.


In a report released late on Monday, Andra said costs for the Cigeo deep geological storage project could be as high as 30 billion euros or as low as 20 billion depending on assumptions about different cost factors in coming years.

"There are different views on the calculation, more or less conservative, depending on estimates for future technological progress and optimisation," Andra said in a statement.

In a letter to the energy ministry, posted on the ministry's website, EDF, fellow state-controlled company Areva and the CEA (Atomic Energy Authority) said they estimated the cost at around 20 billion euros.

"Andra's study only took into account a small number of possible optimisations," they said in the letter, adding that a certain number of costs and ratios used by the state agency were not in line with their experience.

"We are waiting for a decision of the energy minister on the cost of storage," an EDF spokesman said.

The energy ministry's decision on the 10 billion-euro gap in estimates could have a huge impact on the already stretched balance sheet of EDF, whose 58 nuclear power plants produce the bulk of France's nuclear waste.

EDF already needs to borrow money just to pay its dividend and is set to spend tens of billions of euros on upgrading its ageing reactors, building new reactors at Hinkley Point in Britain and buying the reactor arm of Areva.

EDF said in a statement on Tuesday it remained convinced that "optimisations" should reduce the Andra estimate. It added that if the government assessment were to differ from its own, it would adjust its provisions, which it said were based on a cost of 20.8 billion euros in 2011 terms.

In its 2014 financial reference document, EDF specifies that a 1 billion-euro increase in the Cigeo cost estimate would lead to an increase in provisions of about 200 million euros. (Additional reporting by Benjamin Mallet; Editing by Keith Weir, Greg Mahlich)