Water rate

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In Switzerland, the water rate is the levy for the use of water power to generate energy.

Definition of terms

Both in Switzerland and in Germany, the term water rate is also used as a term for the fee for the purchase of (drinking) water by households and businesses, although the term water fee is more common in northern Germany .

Legal basis

All hydropower plants that produce no less than 1000 kW gross output are taxable. Small hydropower plants have been exempt from water interest since 1997. The locations of the hydropower plants are unevenly distributed according to the water resources and the existing slopes. The six cantons of Aargau, Bern, Graubünden, Ticino, Uri and Wallis provide a good 80 percent of hydropower production, while Graubünden and Wallis alone generate almost 50 percent. The naturally available hydropower is generally considered a public good under Swiss law. Their utilization by a hydropower plant therefore represents a special use. For their approval, a fee - the so-called water interest - is to be paid to the community that has the water sovereignty.

Since the cantons have sovereignty over the water, the canton can also determine which political level within the canton has tax sovereignty . They can transfer this right to the municipalities or other bodies in their legislation. They are paid by the electricity producers to the communities who are entitled to dispose of them . The cantons or the tax-collecting institution set the amount of the water rate, but at most the rate that the federal legislation on the maximum water rate in CHF per kilowatt of gross output (kWb) (corresponds to the annual mean of the gross output (mean gross output) in kilowatts). The ordinance on the calculation of the water interest rate (Wasserzinsverordnung, WZV) of February 12, 1918 can be found in this regard for further details. The amount is based on the annual mean gross power (mean gross power) in kilowatts.

The law on the «Utilization of Water Power » of December 22, 1916 (WRG) forms the basis for the tax . The ordinances regulate the details. Initially, the maximum water interest rate was 6 francs per horsepower (PS) or the equivalent of 8.16 francs / kWb. The Federal Parliament last increased the maximum allowable rate on January 1, 2015 from 100 to 110 Fr./kWb. Since the Federal Water Act (WRG) came into force in 1918, the maximum water interest rate has been adjusted irregularly. In May 2018, the Federal Council asked the Federal Assembly to leave the maximum water interest rate unchanged until 2024. In March 2019, the revised Water Rights Act, which came into force on January 1, 2020, was passed by parliament.

Legal nature and essence of water interest

The water rate is a public charge for the special right of use granted with the concession on a public body of water, namely for the right to utilize a hydropower potential for the generation of electrical energy. In the system of tax types, the water rate is assigned to the causal tax. In contrast to taxes, these are tied to a specific consideration by the community that can be attributed to the taxpayer. However, since fiscal interests are also at play when it is collected, the water rate is one of the shelf and monopoly fees.

The regulation of the water interest rate, also with regard to possible later adjustments, is part of the compulsory content of the license (Art. 54 lit. f WRG). The water rate is owed annually for the duration of the concession, but can be reduced in the first six years after the start of operations (Art. 50 WRG). It should be noted that the use of hydropower that has been approved in a form other than the concession is also subject to the obligation to pay interest on water. This possibility is only given, however, if the community entitled to dispose transfers the right of use to another community (Art. 3 Para. 2 WRG), and is therefore of little importance in practice.

The calculation of the water interest is based on the WRG (Art. 51) and the implementing regulations in the Water Interest Ordinance of February 12, 1918. The mechanical gross output in kilowatts determined according to these decrees multiplied by the respective cantonal water interest rate results in the annual water interest rate. The cantons can choose a different calculation method; However, the water rate must not be higher than if it had been calculated according to federal law using the maximum rate in accordance with Art. 49 Para. 1 WRG (Art. 1 Para. 2 WZV). In addition to the water interest, cantonal special taxes on hydropower may only be levied if both taxes together do not exceed the maximum water interest possible under federal law (Art. 49 Paragraph 2 WRG). Such taxes are known, for example, in the cantons of Graubünden and Valais. This does not affect special levies on artificially generated hydropower (pumped storage), corporate taxation in accordance with general federal and cantonal tax legislation, and water uses that are not related to hydropower (drinking and industrial water, etc.).

Storage surcharge

Storage surcharge shown as a scheme

The idea of ​​the storage surcharge came up with the required tariff increase, which was announced on August 6, 2007.

The storage surcharge is calculated per storage tank from the ratio of the storage volume to the volume of all tributaries flowing to the storage tank (natural tributaries plus supply lines) or, in other words, from the ratio of the contents of the reservoir to the total inflowing water in one year. Seen in this way, the storage surcharge is zero in a classic run-of-river power plant which has no storage volume. In the case of a storage power plant in which the annual inflows can be fully stored, this is a maximum.

Importance of water rates

Meaning as taking mountain cantons

The water interest income for the whole of Switzerland currently amounts to around CHF 400 million annually; of this, around 60% or around CHF 270 million is attributable to the cantons of the Intergovernmental Conference of the Mountain Cantons (RKGK). The water interest income is not subject to any earmarking . Requests in this regard were always rejected by the cantons concerned. Other cantons with high income from water interest are, for example, Aargau and Bern. The distribution among the seven cantons of the RKGK is as follows:

Development of water rates since 1918
Water interest income in CHF million 2006
GL Glarus 9.3
GR Graubünden 87.4
NW Nidwalden 1.2
OW Obwalden 3.0
TI Ticino 40.4
UR Uri 19.3
VS Wallis 108.1
Total regional conference of the mountain cantons 268.0

Significance as a share of today's electricity price

The average load on the electricity production costs of the energy generated from hydropower by the water interest is just under 1.2  cents / kWh . In relation to the nationwide electricity production, which on average is composed of 57 percent hydropower, 38 percent nuclear energy and 5 percent conventional thermal power plants , this results in a load from the water interest rate of around 0.7 cents / kWh. That is around 4.4 percent of the consumption price when it is 16 cents / kWh.

criticism

Indexing of the maximum water rate

The federal water rate maximum has never been indexed. As a result, the mountain cantons have to accept significant revenue losses within a short period of time. Compared to the time when the last increase in water rates came into effect on May 1, 1997, the inflation-related losses for the seven mountain cantons currently amount to CHF 34 million per year. In order to prevent this permanent loss of income in the future, an annual inflation adjustment is to be guaranteed via a legally anchored indexation.

Making water rates more flexible

In 2003, ETH Zurich carried out a study on water rates. In it she calls for more flexibility in water rates, as these do not reflect the effective economic costs of hydropower. The study demands that tax should no longer be based on gross performance, but on the basis of their economic performance. The study has been heavily attacked from various quarters for drawing wrong conclusions.

Quoting from an interview with Massimo Filippini from the CEPE at ETH Zurich: "Our system is based on the well-known theory of the return on resources," explains Filippini. “In concrete terms, this means: The water rate is based on the income that is achieved minus the costs of using the resource water. How large is the portion that is skimmed off as water interest is a normative question and must be determined politically. "

Individual evidence

  1. Federal Constitution of the Swiss Confederation - Article 76 Water , admin.ch, accessed on January 23, 2017.
  2. As download: Wasserzinsverordnung , admin.ch, accessed on January 23, 2017.
  3. Law on the Utilization of Hydropower , admin.ch, accessed on January 23, 2017.
  4. Michel Piot and Roger Pfammatter: Making water rates more flexible - an opportunity for everyone In: bulletin.ch , accessed on May 25, 2018.
  5. Explanatory report on the amendment to the Water Rights Act (consultation draft) of June 21, 2017 In: admin.ch (PDF), accessed on May 25, 2018.
  6. The Federal Council: Federal Council proposes maintaining the maximum water interest rate until 2024. Retrieved May 24, 2018 .
  7. Federal Office of Energy: Federal Council puts revised water law legislation into effect on January 1, 2020. September 13, 2019, accessed January 3, 2020 .
  8. Power plants of the Canton of Graubünden ( Memento from July 5, 2007 in the Internet Archive ), energie.gr.ch.
  9. Power plants in the canton of Uri , ur.ch, accessed on January 23, 2017.
  10. Media release for ETH study on water rates, ethz.ch, accessed on January 23, 2017.
  11. ^ Critique of the Greina Foundation ( memento of October 8, 2007 in the Internet Archive ), greina-stiftung.ch.
  12. Interview with Massimo Filippini , ethz.ch, accessed on January 23, 2017.