BERLIN (Reuters) - Shares in RWE RWEG.DE, Germany's largest power producer, rose almost 5 percent on Wednesday at the prospect of higher compensation should coal-fired power stations be shut down early.
A draft paper by Germany’s government-appointed coal commission, which is tasked with organizing the exit from coal, showed operators of coal-fired power stations should receive compensation for early closure but did not specify the size of payments.
A shut down date is due to be settled on Friday.
The 133-page draft document, seen by Reuters, said a mutual agreement between the government and the plant operators, including RWE and Uniper UN01.DE, was the preferred option.
“The Commission assumes that in the negotiations with the operators of lignite-fired power plants the entire planning period up to 2030 will be settled by mutual agreement,” the draft said.
If such an agreement cannot be reached by June 30, 2020, the commission will recommend a “regulatory” solution including compensation payments based on legal requirements, it said.
While no figures are mentioned, the commission suggests that the compensation for operators should be based on payments made for similar cases in the past. Utilities have already received around 600 million euros ($682 million) per gigawatt to idle plants and put them into a strategic reserve.
“If true, this would imply much more meaningful compensation for RWE than we currently assume,” Jefferies analysts wrote in a note following the Reuters report.
Shares in RWE were the highest gainer on Germany’s blue-chip index. Shares in Uniper gained only 0.4 percent, however.
The commission consisting of politicians, researchers and lobbyists is expected to adopt a more detailed version of the paper on Friday.
According to the draft, fees for the use of electricity grids should be reduced for both industry and private consumers and operators of coal-fired power stations should receive compensation for early closure.
“The necessary funds must be made available by the state to finance the recommended measures. There will be no surcharge on electricity prices,” the paper says.
The entire phase-out is to be reviewed again in 2023, 2026 and 2029 with a view to security of supply, prices, climate protection and structural change.
($1 = 0.8797 euros)
Writing by Arno Schuetze and Christoph Steitz; Editing by Michelle Martin and Alexandra Hudson
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