“Revision of the Swiss Water Fee System” – new complementary study as part of NRP 70

The revision of the water fee system is considered among the most important challenges ahead for Swiss hydropower. At around CHF 500 million per year, the water fees represent a significant source of income for mountain cantons and municipalities. At the same time, the revenues of hydro companies and the resulting tax income as well as dividend payments to shareholders provide income for many other Swiss cantons – often not the same ones that profit from the water fees.

Based on the research activities of the NRP 70 joint project "The future of Swiss hydropower", a complementary study carried out as part of the NRP 70 and led by Prof. Dr. Hannes Weigt examines two key aspects of the revision of the water fee system. Firstly, potential shifts in financial streams to companies, cantons and municipalities under a mixed fixed-variable water fee regime. Secondly, long-term impacts of water fees (i.e. investments, external impacts, uncertainty and sustainability issues), on economic and financial factors at cantonal and regional level, as well as the impact on the upcoming renewal of concessions.

First, using a set of potential market development scenarios, the distributional effects of the proposed water fee adjustments are examined. Second, the derived insights on changed water revenues and fees are used to evaluate the role of water fees for long-term aspects (i.e. investments, external impacts, uncertainty and sustainability issues), on the economic and financial effects at cantonal and regional level, as well as the impact on the upcoming renewal of concessions.

The research on operational and revenue estimates is linked with the financial streams in and between cantons. Taking these results into account as well as an investment analysis and the regional and conceptual research, the long-term prospects of a change in the Swiss water fee framework are evaluated.