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Wednesday, June 01, 2011

German Nuclear Utilities Threaten Lawsuits Over Shutdown

German energy companies E.ON GA and RWE AG are threatening to sue the government over their decision to shutdown the nuclear reactors by 2022. A third reactor operator, southern Germany's EnBW Energie Baden-W├╝rttemberg AG is reviewing its tax exposure before making any decisions.   German Chancellor Angela Merkel  must still win parliamentary backing to shut down the reactor.

E.ON is calculating the revenues it will lose by running its reactors for fewer years than planned and its exposure to new taxes on nuclear fuel rods. The company expects the billions of euros in necessary compensation for the financial losses associated with this decision.

Part of the utilities' frustration is a new tax on nuclear fuel rods, introduced at the beginning of this year when Germany planned to extend the life span of its nuclear reactors. Back then, the utilities were looking forward to windfall profits, and Germany's treasury wanted to benefit. Ms. Merkel reversed her nuclear policy after the earthquake and tsunami struck Japan's Fukushima Daiichi plant in March, swiftly shutting Germany's seven oldest plants and ordering a wider nuclear policy review. That culminated in plans to keep the old reactors offline and put those remaining out of service by 2022.

But the fuel-rod tax remains in place, to utilities' annoyance: The government had already earmarked the revenues to help it curtail its budget deficit. Berlin aims to raise some €2.3 billion ($3.3 billion) a year from the tax.

The government cannot build enough wind turbines and solar installations or import enough natural gas or electricity to meet Germany's target of cutting greenhouse-gas emissions to 20% of their 1990 level by 2050.  This political mess will ruin Germany's energy sector if it is allowed to continue. (WSJ, 6/1/2011)

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