Germany: Nuclear-energy provisions fully reflect future obligations and are high compared with other countries

The report commissioned by the German Federal Ministry for Economic Affairs and Energy to assess the asset retirement obligations of the country’s nuclear power plant (NPP) operators has found no ground for objecting to their accounting practices. It therefore accepts the accounting practices that have been used by the operators for decades and which have also been certified by the world’s leading auditing firms. In view of this unequivocal finding, speculation about a possible need for higher provisions has no basis in fact.
Beyond this key finding, the report also includes sensitivity analyses based on alternative stress-test parameters. The analyses make certain assumptions regarding future interest rates and cost growth, resulting in the calculation of different amounts. This will not alter the companies’ recognized accounting practices, since the underlying assumptions of such sensitivities are unrealistic and have never been used in any sector. In extreme cases, these stress-test sensitivities assume that interest rates will remain very low well into the future and will be accompanied by extremely high cost and price increases rates, resulting in long-term negative specific real interest rates. ….