Fears over the viability of Switzerland’s hydroelectric sector due to stranded costs have set back a final government vote on opening up the industry to competition. Federal authorities are to consider a number of options aimed at propping up hydro financially and the recovery of stranded costs. But, a majority of voters in a special referendum threw out a proposal by environmentalist lobbyists to raise around $440 million a year in a new tax on non-renewable fuels for 25 years, using the proceeds to develop solar energy and settle the stranded costs issue before opening the market to competition. Under the plan, the fund would be used to offer loans to unprofitable hydroelectric plants. A vote on the issue is now expected in December.
The country’s Gas Utilities Association has also warned that consumers are likely to see a fall in the price of natural gas of less than 10 per cent upon liberalisation. The Association is to seek market opening in line with the gradual approach now being adopted by neighbouring countries, with the same minimum opening levels. This would initially permit customers representing 20 per cent of national consumption freedom to choose, rising to 28 per cent in five years and 33 per cent after 20 years. The government is expected to have drafted a gas law by the end of this year which could be passed into law the following year, ensuring that the market is open by 2003. According to figures from the International Energy Agency, Swiss gas prices have been falling since 1992, but remain above those of OECD countries in Europe.
