Analyst View: German cabinet extends nuclear plant life

FRANKFURT (Reuters) - Chancellor Angela Merkel's coalition has agreed to a two-tier extension of German nuclear plant lifespans that on average will let plants operate for 12 years longer than is now the case.

Shares in Germany's E.ON and RWE, two of the world's largest utilities, rose on the news which broke late on Sunday.

Here is how analysts view the development:

MARIO KRISTL, DZ BANK

"The planned law on the extension of lifetime of nuclear power plants should work without the approval of the German Bundesrat (upper house of parliament) in our view...The longer-than-expected lifetime extension, apparently without requirements on higher safety standards, is clearly positive for E.ON and RWE."

SILVIA QUANDT RESEARCH

"Overall a good outcome for utilities, which can maintain the "status quo' in energy landscape. The additional costs and the investments will be tax deductable. The government calculates the additional costs at 9 euros ($12.08)/MWh, or 6.5 percent of current average MWh costs per typical household."

THEO KITZ, MERCK FINCK & CO

"Our first reaction is positive because the extension is longer than we expected. However, it remains to be seen whether the Bundesrat, where Merkel's coalition has no majority, will approve the extension."

WESTLB ANALYST TEAM

"All in all the financial burden (on the sector) is 1.9 billion euros now instead of 2.3 billion, which is the positive news. (It is) still unclear which costs are linked to safety measures and whether all nuclear power stations will really prolong their lifespan. Also (the) exclusion of (involving the) Upper House is still unclear. Simple calculation for stock prices: with respect to RWE: net profit 120 million better than before, multiplied by P/E of 10 = 1,200 million (or) 2.20 euro higher RWE share price. For E.ON: net profit +170 million euros x 10x P/E = 1,700 million euros (or) 0.90 euro per share."

HEINO RULAND, RULAND RESEARCH

"It is well known that this law will be reversed in case of a red/green coalition (being elected)," he said, referring to prospects that a coalition of Social Democrats and environmentalist Greens could replace the current line-up of conservatives and pro-business Free Democrats.

(Reporting by Hakan Ersen and Josie Cox)