Merkel backs plans to cap German power price rises before poll

Fri Feb 1, 2013 8:52am EST

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* Says proposals are "valuable, important and good"

* Coalition partners say the plans do not go far enough

* German power and carbon prices rise on Merkel's backing

BERLIN, Feb 1 (Reuters) - German Chancellor Angela Merkel on Friday threw her weight behind plans presented this week by her environment minister to limit increases in electricity prices for consumers despite opposition from some in her centre-right coalition.

The public declaration of support for Peter Altmaier's plans show that Merkel wants to try to push the reforms through parliament before September's election.

"Peter Altmaier has made valuable, important and good proposals which we should talk about," Merkel said in Berlin, adding all parties should work together to agree on the reforms.

"For me it is clear that there must be a change in the Renewable Energy Law if we want to achieve three things: price sustainability, an environment-friendly approach and supply security," she said.

Emissions traders said Merkel's support of Altmaier's plan to limit electricity price increases for consumers pushed German power and carbon prices higher. Benchmark EU carbon futures rose around 27 pct to 4.35 euros a tonne as traders covered short positions.

Altmaier on Monday presented his proposals to share the cost of Germany's switch to renewable energy from nuclear more evenly between consumers and industry.

Until now, many energy-intensive companies have been exempted from charges imposed on consumers to help finance the switchover. A sharp rise in the surcharge paid by households has led to something of a public outcry and Merkel is keen to show voters she is trying to curb increases.

However, to get the plans through she has to convince her Free Democrat (FDP) coalition partners who have advocated a wholesale rethink of the renewable energy law before the election. For them, Altmaier's plans do not go far enough.

Economy Minister Philipp Roesler, head of the FDP, has described the plans as going in the right direction but has also said that more would be needed.

It also looks unlikely that the opposition Social Democrats (SPD) and Greens will back the proposals in their current form. They could block them in the Bundesrat upper house where Merkel's centre-right coalition no longer holds a majority. So far opposition parties have attacked the plans.

Altmaier, who held a news conference later said that he was willing to adapt his plans but that the basic idea of capping power prices by limiting the costs of the energy switch had to remain intact.

"You can change some things, but not the basic principle," said Altmaier.

Wholesale power and carbon markets are watching political developments with great interest.

A price slump in German power, partly driven by the rapid additions of renewable units, could end or start being reversed if policymakers put a stop to the unhindered increases in supply, traders said. (Reporting by Gernot Heller; writing by Madeline Chambers; editing by Vera Eckert and James Jukwey)

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