Decommissioning in 2019

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Violet King
5 years ago
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1 The statements may be used as a basis for quotes. Mühleberg Nuclear Power Plant Decommissioning in 2019 Address by Suzanne Thoma, CEO of BKW Inc., to the Media Conference on 30 October 2013 Ladies and Gentlemen, Today the Board of Directors has made an important decision at the request of the Executive Board. It is a business decision, not a political decision. And it was made because we view the economic opportunities and economic risks of long-term operation as unviable. As our Chairman Urs Gasche has already mentioned, the question of when low electricity prices will rally played an important role in this decision. For a facility such as Mühleberg nuclear power station that in any case is in the last third of its operating life, the question of when electricity prices will recover is of particular relevance. I'd like to kick off by explaining the importance of this decision in the wider BKW context: - Within the balance sheet total of ca. CHF 8 billion, the KKM currently has an asset value of only around CHF 400 million: in other words, 5 percent - In the next few months our Wilhelmshaven power plant will be connected to the grid albeit the German grid. Our share delivers 2/3 of the capacity of Mühleberg - BKW's role as the third-largest electricity supplier remains intact. Even after 2019 BKW will supply its basic-provision customers and its electrical utility partners with home-grown Swiss electricity. If one includes our foreign capacities, BKW still commands a pronounced long position and an interesting position in electricity trading. - Today BKW already has 400 MW of wind power capacities in Germany, Italy and Switzerland. Part of our corporate strategy is to further expand these capacities as and when appropriate. BKW is the largest Swiss investor in, and operator of, wind power. - BKW operates Switzerland's largest distribution network with a total length of around 20,000 kilometers. - The drive to develop innovations, new services and business models is making good progress. According to our plans, these will at least be able to make up the shortfall in revenues when the KKM comes to the end of its operating life. - Even now, 1,200 employees work for BKW's service business.

2 2 The decision was difficult and involved lengthy deliberations. The KKM is an important part of what makes BKW the company it is. It makes an important contribution to electricity supplies in the canton of Bern. It is a byword for first-class technical competence and reliability. It represents a safety culture that can is stand comparison to any in Switzerland and abroad. Throughout the years the KKM has been a substantial source of revenue for BKW, helping to generate funds that enabled the company to develop, not least in terms of its expansion of renewable energies. The decision was also difficult because by 2019 the resultant shortfall of 3 TWh of electricity cannot immediately be offset by BKW's own Swiss production volumes. Unfortunately, for various reasons the opportunities to build additional new capacities in Switzerland within such a short time frame are extremely limited right now. Switzerland will therefore become more dependent on imports from abroad, and electricity from foreign nuclear power facilities and fossil-fuelled plants will play an important role. Yet the decision to continue operating the plant until 2019 and against long-term operation was correct and made with an eye to the future. Low electricity prices and the uncertain outlook for their recovery are generally impeding investments in production capacities. This is particularly true of investments in the KKM's long-term operation. The political and legal environments are changing rapidly, and there are limits to the predictability of such developments. New safety findings, new financial requirements, additional moves to promote alternatives energies which could cement the existing market distortions, are all highly possible. So the possibility of additional hikes in operating costs and additional unplanned investments which place further strains on profitability cannot be excluded. Such boundary conditions are impeding investments in Mühleberg's long-term operation. Even if not all of these factors are directly comparable, please note that these difficult circumstances are also impeding other less controversial investments such as spending on hydro power. But let's now take a look at the future. For the plant's operation until 2019, BKW aims to invest CHF 200 million, of which regular investments make up the lion's share. The purpose of the additional investments is - to reinforce the Wohlensee dam, work on which has already begun and will make the greatest contribution to safety enhancement of all the planned measures, - to install an alternative cooling water supply but without building the Saane line,

3 3 - to put in place additional precautions for the residual heat removal By implementing these measures, BKW will further increase the KKM's safety: not only will it be above the legally prescribed safety level, but also well above the additional safety margin required by ENSI. Months ago - long before the decision was made - BKW started drawing up rough plans for the decommissioning, post-operational and dismantling/disposal stages. This work is now being stepped up. Once more BKW is playing a pioneering role. It will be the first Swiss electricity supplier to tackle the challenging task of shutting down a nuclear power plant. I am convinced that BKW will carry out this task with its customary thoroughness and commitment. As I have already mentioned, BKW stands for first-class technical competence and reliability, and for a safety culture that can stand comparison to any in Switzerland and abroad. This will also be true of the post-operational and disposal stages. I am also convinced that we will succeed in channelling the acquired know-how and experiences into new business opportunities. The decision announced today will not have any immediate consequences for the nuclear power plant's workforce. All KKM staff will continue to be employed at the plant until operations cease at the end of No redundancies are planned. According to current plans, the decommissioning will be completed only in the 2030s. Our goal is to train and retain the KKM's specialists and technical experts for the remaining years of its operating life and for the post-operational and decommissioning phases. Over the coming decades there will be good job opportunities for such employees in Switzerland. Over the very long term, however, jobs at Mühleberg will be shed. This applies to positions at the plant itself as well as to jobs with suppliers who indirectly depend on Mühleberg nuclear power plant. But new jobs will be created also in the Berne region. The decision is an expression of our resolve to drive forward the BKW transformation process swiftly and consistently. The new corporate structure came into force this year on 1 July. New renewable energies and the new business models are now directly represented on the Executive Board. We are revising our processes and making every effort to pool our employee's extensive know-how and use it in the marketplace and for innovations. Our cost efficiency programmes are progressing well, and the targeted cost reduction of CHF 100 million which has been communicated to you will be achieved. This includes shedding 250 jobs in the production, networks, trading and overhead areas. At the same time BKW is growing, since we are

4 4 creating significantly more jobs in the services area than are being shed in BKW's traditional businesses. Ladies and gentlemen, I want to emphasise again that BKW is a growing enterprise. It is creating new jobs, of which a good number are in the Berne region. We are developing new products and services for our wide-ranging and discerning customer base. Our customers private customers, other electricity suppliers, municipalities and canton, SMEs and large companies have new and varying needs. The energy supply landscape is changing, and with it the needs of our customers. In a complex, networked and highly heterogeneous supply system, we believe our task as an energy services provider is to offer the best possible solutions. In future, this will include virtually 100% availability of sufficient electricity. In future our task will be to deliver electricity and more besides to our customers reliably and cost-effectively. And this means that the production and distribution of electricity will remain important Note also that the difficult decision not to invest in the long-term operation of Mühleberg nuclear plant and to take it off the grid in 2019 also represents an opportunity: - It sends out another signal to all employees that for BKW the future has begun with new opportunities and challenges - It reduces the influence that as yet unforeseen political and regulatory initiatives and official decisions could have on its future - It frees up capital which can now be deployed for other options. This could be investments in renewable energies, in the grid, in our service business or in entirely new business models. - It strengthens our resolve to do our homework. Customer focus and market orientation, cost efficiency, and new products and services are the key. Before I conclude I would like to express a vote of thanks and talk about my expectations. My thanks go first and foremost to former and current employees of Mühleberg nuclear power plant. For more than 40 years and going forward until 2019 they have proved utterly reliable in making an important contribution to Switzerland's electricity supplies. These employees, like all BKW managers and staff, have earned not only laurels for this commitment to their job.

5 5 My expectation and goal is to keep them working in the same capacity over the next six years, and guarantee the plant's safety through additional improvements. But I also expect us to take advantage of the opportunities that this change affords us, to make optimal preparations for the post-operational and decommissioning stages and, in so doing, take BKW further along its new path consistently and without any deviations. Many thanks for your attention!

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