German nuclear exit sparks E.ON legal challenge

FRANKFURT Tue May 31, 2011 11:50am EDT

A general view of the Brokdorf nuclear power plant of German utility giant E.ON in Brokdorf near Hamburg September 28, 2010. REUTERS/Christian Charisius

A general view of the Brokdorf nuclear power plant of German utility giant E.ON in Brokdorf near Hamburg September 28, 2010.

Credit: Reuters/Christian Charisius

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FRANKFURT (Reuters) - E.ON, Germany's largest utility, is to sue the government for billions of euros in damages arising from the decision to abandon nuclear power within the next decade.

"The company expects adequate compensation for damages related to these decisions amounting to billions of euros," E.ON said on Tuesday.

An E.ON spokesman said shortening the lifespan of nuclear power plants and charging a tax on nuclear fuel was unlawful in itself and also violated European Union law that forbids discrimination against nuclear power.

The spokesman said the damages would be in the low double-digit billions of euros.

The German Finance Ministry said it would not comment on E.ON's decision.

Peer RWE, Germany's largest power producer, said on Monday it, too, was considering a legal challenge.

After weekend protests against nuclear power drew more than 150,000 people in cities such as Berlin and Munich, German Chancellor Angela Merkel's ruling coalition announced on Monday the decision to shut all nuclear reactors by 2022, in a hasty policy reversal drawn up after the disaster at the Fukushima reactor in Japan.

That will cost power producers E.ON, RWE, EnBW and Vattenfall's German unit dear.

DZ Bank analyst Marc Nettelbeck estimates that E.ON, Germany's largest utility, will forego as much as 600 million euros ($857 million) in earnings before interest and taxes this year, and RWE, the country's largest power producer, as much as 575 million euros.

That amounts to 9 percent of RWE's forecast 2011 earnings, while E.ON does not forecast its earnings.

Provisions will rise, as utilities have to accumulate the funds for decommissioning the nuclear power plants during the plants' lifetime -- and as that time is shorter, they will have to put more aside annually.

E.ON Chief Financial Officer Marcus Schenck has previously said that an early closure would cost between 100 million euros and 1 billion euros for each nuclear power plant.

The decision to shut all nuclear power plants by 2022 also gives more weight to renewable energy sources as it eliminates a competing energy source that is almost carbon free.

Renewable stocks have risen as a consequence of the government decision. The FTSE cleantech index of the world's 50 largest renewable companies is up 2 percent since the beginning of the week.

Gains are based on the impression that the emphasis on carbon-free power and the lack of one major energy source, which supplies about a fourth of Germany's power, has to lead to more investment in renewable energy.

"The decision to phase out nuclear should be positive for the short-term performance of solar stocks ... especially as Germany has always been a major market for their products," said Societe Generale analyst Didier Laurens.

(Reporting by Christoph Steitz and Peter Dinkloh; Editing by Will Waterman)

($1=.7000 Euro)

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Comments (1)
paintcan wrote:
The states of Baden-Wurttemburg and Bavaria have numerous towns with the word “Bad” (Bath) as a prefix. That would imply that they are the sites of either mineral or hot springs. Germany had easy alternatives to nukes without the need for eternal resting places for the waste products.

I don’t for a minute believe that geothermal power is more expensive or complicated to harness than the atom. In fact I did some quick online research and found that it is a very inexpensive alternative and already making headway in many places on the globe and can deliver large MWe output.

A nuclear plant generates steam – super heated steam – to drive turbines. There are other ways to generate steam without the toxic waste products. And as I understand it, geothermal power does not even require a change in subsurface water levels or the use of above ground detention ponds to store wastewater.

A geothermal plant is essentially a heat pump. There are no atmospheric emissions with the use of geothermal power. And that little research confirmed that southern Germany had the high temp water available. The plant being built in Australia is simplicity itself. The only problem they are wrestling with is increasing the capacity of the pipes to circulate more water.

That option hasn’t been mentioned in these articles.

May 31, 2011 8:36pm EDT  --  Report as abuse
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