UPDATE 3-German power firms to shift funds in landmark nuclear deal

* Bill of 23.6 billion euros for waste storage - draft law

* Utilities can pay in instalments to 2026

* First payment must be 20 pct of total sum

* Shares in E.ON, RWE, EnBW rise on clarity (Recasts, adds funding breakup, details)

By Markus Wacket

BERLIN, Oct 14 (Reuters) - Germany’s leading utilities will start contributing next year to a 23.6 billion euro ($26.4 billion) fund as a condition for shifting liability for nuclear waste storage to the government, giving investors greater clarity over their future finances.

The new legislation, seen by Reuters on Friday, will remove uncertainty about the costs of storing waste -- the most complex and costly aspect of nuclear decommissioning -- which has been a major drag on German utility stocks.

The utilities will remain responsible for dismantling the country’s nuclear plants, the last of which will be shut down in 2022 as part of Germany’s abandonment of the technology, a decision triggered by Japan’s Fukushima disaster five years ago.

The German cabinet is set to approve the law on Oct. 19, bringing to an end lengthy negotiations between Berlin and the country’s four major energy groups -- E.ON, RWE , EnBW and Vattenfall -- on a waste storage deal proposed in April.

With a combined liability of about 16.7 billion euros, E.ON and RWE will have to stump up most of the funds. E.ON has said it might carry out a share sale to raise about 2 billion euros to help achieve this.

E.ON and RWE shares led German blue-chips higher following the news and were up 3.7 percent and 5.4 percent, respectively. Shares in EnBW, most of which is owned by the German state of Baden-Wuerttemberg, were also up 3.2 percent.

“The draft law gets us hard facts following reports and speculation over the past days and as a result the uncertainty that has paralysed the sector more and more disappears,” said Frederik Altmann, equity trader at Frankfurt-based Alpha.

The utilities had been pushing to get favourable terms from the government, arguing they have been hammered by plunging power prices, a shift towards renewable energy and Germany’s nuclear exit, which has taken its toll on their finances.

Under the deal, companies can transfer the funds in one lump sum on Jan. 1, 2017, or in several instalments over the next decade.

If utilities opt to pay in stages, their first payment must be a fifth of the total. They will have to pay interest of 4.58 percent per year on the remaining amount, an incentive to pay as much as possible up front.

Those utilities that decide to pay in instalments will also have to provide collateral for what they still owe, which could be via a bank guarantee, according to details of the draft law.

E.ON, RWE, EnBW and Vattenfall all declined to comment.