* RWE launches cost cutting programme Neo - document
* Cost cuts of at least 500 million euros - source
* Shares up 1.4 percent
(Adds details on savings, document)
FRANKFURT/DUESSELDORF, July 22 German utility
RWE has launched a new savings programme to cope with
loss-making power plants and low wholesale power prices,
according to an internal document obtained by Reuters.
The document said Germany's No. 2 utility did not rule out
job cuts at its power plant division as part of the programme,
"The generation market has significantly changed to our
disadvantage. To be able to survive in this environment, our
work processes and costs need to be adjusted," said the
document, sent to employees of RWE's power plant unit.
A source familiar with the matter told Reuters cost savings
could amount to at least 500 million euros ($657 million)
Along with peers E.ON and EnBW, RWE has
come under intense pressure from falling wholesale power prices
in Europe, its core market.
In addition, the strong expansion of renewables has hurt the
profitability of gas plants, as power from solar and wind
sources takes priority in being fed into the electricity grid,
reducing the hours gas plants can run.
Neo has been launched on top of the group's ongoing cost
savings programme "RWE 2015", aiming for additional cost cuts of
about 1 billion euros by the end of 2014.
When asked for comment on Monday, RWE said that it was
reviewing all of its costs, adding these reviews were ongoing.
German business daily Handelsblatt had earlier reported that
RWE had launched new cost cuts.
RWE's Chief Executive Peter Terium had told Reuters last
year that more job cuts were necessary at the company, which is
trying to reinvent itself following Germany's decision to
abandon nuclear power by 2022.
($1 = 0.7611 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; additional
reporting by Victoria Bryan and Ralf Banser; editing by Maria
Sheahan and Keiron Henderson)