DISTRIBUTIONAL EFFECTS OF THE REVISION OF SWISS WATER FEES

摘要

Since the electrification of Switzerland at the beginning of the 20th century, hydropower has been the country’s main domestic source of electricity. However, the economic crisis, the low price of coal and of CO2 certificates as well as the national and other European subsidy systems for renewable energies have led to a significant drop in overall electricity wholesale market prices. Therefore Swiss hydropower operators got under pressure to identify strategies to increase competitiveness by reducing production costs (Filippini et al., 2017). To support existing hydropower companies in the short-term the Swiss government has introduced some temporary support mechanisms. However, water fees form an important cost element for hydro companies threatening their profitability. At the same time with about 500 million CHF per year these fees represent an important income for mountain cantons and municipalities. In June 2017 the Federal Council decided to open a debate on the reformation of the water fee regime proposing that after a transition phase (until 2022) with reduced fees a new system combining fixed and variable components is to be implemented. This change is likely to have a profound impact on the future of Swiss hydropower. Given that those changes will affect middleland cantons, which are mainly the shareholders of the larger utilities in Siwtzerland and mountain cantons which receive the water fee differently, this reform will be challenging for Swiss policy makers. Given the ongoing debate about the role and future of Swiss hydropower, the objective of this paper is to focus on the potential shifts in financial streams to companies, cantons and municipalities under a mixed fixed-variable water fee regime. Using a set of potential market development scenarios, we will highlight the distributional effects of the proposed water fee adjustments.