EDF Slumps on Report It Underestimated Cost of Waste Storage

Updated on
  • Deep storage project may cost 30 billion euros, Les Echos says
  • French utility sees `optimizations' at site reducing expense

Electricite de France SA, the operator of 58 atomic reactors in France, dropped to a record in Paris trading after newspaper Les Echos said the utility may have underestimated the cost of storing its most radioactive waste.

EDF fell 4.4 percent to 11.96 euros on Tuesday, the lowest close since the stock began trading in the French capital in 2005.

France is seeking to store long-life radioactive waste from EDF’s reactors, as well as from Areva SA and atomic-research organization CEA, at a site near Bure, which straddles the Meuse and Haute-Marne regions. Andra, the agency that manages nuclear waste, has put the cost of building and operating a deep storage facility at about 30 billion euros ($32.6 billion), Les Echos reported, citing people it didn’t identify. EDF, Areva and the CEA last year estimated the bill at about 20 billion euros.

“This report is clearly negative for all nuclear operators, and most specifically for EDF and Areva, but the risks of project-cost revaluation is not new,” Xavier Caroen, an analyst at Bryan Garnier & Co., said in a research note.

Andra, EDF and Areva released a joint statement Monday, saying “the development and construction of the storage will be progressive over the entire operating lifespan, and will also include optimizations and innovations compared to the draft project, some of which are already identified.”

EDF added in a statement Tuesday that it “remains convinced that optimizations should reduce the overall cost” of the project. The Paris-based utility, which has budgeted for a shared cost of 20.8 billion euros “under 2011 economic conditions,” said it would reflect any new government estimate in its accounts.

EDF, Areva and the CEA are due to fund the storage facility using assets placed in dedicated funds. Construction of the first phase is scheduled for around 2021.

(Updates with EDF comments on cost in sixth paragraph.)
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