Finland currently has two producers of nuclear power: Fortum and TVO. These two companies have formed a joint venture, Posiva to take care of their spent nuclear fuel. Having this done through a joint facility may seem to be in the public interest, as you would want the handling to be done as well as possible.
However, whether this joint venture solution really is in the public interest is called into question with the potential entry of a third nuclear power producer, Fennovoima. Posiva claims that their facility doesn't have room for Fennovoima’s spent fuel. This means that Fennovoima would be forced to make a rather large investment in an own facility in order to start their own nuclear power plant. This puts Fennovoima at a disadvantage compared to the other (nuclear) power companies. It could potentially also deter Fennovoima from entering the market, if the investment in an own facility would be too expensive.
Why is this troublesome? Doesn't Posiva and its owners TVO and Fortum have the right to decide how their facility is used? This might seem a reasonable assumption. However, having two competing companies (TVO and Fortum) form a joint venture to reduce their own costs, while excluding new potential entrants to the market is clearly problematic.
The reduction in costs that the joint venture (or to use another term: collusion) achieves is largely a reduction in fixed, not variable costs of power production for TVO and Fortum. This means that the cost savings that are achieved will not be very well reflected in prices. Thus the benefits will mainly accrue to the owners of the companies, rather than the customers. Additionally, if they manage to exclude Fennovoima, the effect will be that prices will be higher, to the detriment of consumers.
There are a lot of precedents for forcing owners of so called essential facilities to give other actors on the market access to these. One example is the phone network, where local phone companies must rent access to the “last mile” to competitors to allow these to sell broadband access. Enforcing similar policy on Posiva might be sensible.
If this is not possible, the seemingly rational decision to let Fortum and TVO build a joint facility may not be that good from an economics point of view, if it leads to increased concentration of suppliers. And once Fortum and TVO has learned to collude cooperate in the realm of spent nuclear fuel, there might be fertile ground for cooperating on other issues as well…
