BERLIN/FRANKFURT (Reuters) - German power firms will have to pay less for the storage of radioactive waste than investors had feared if the government accepts a recommendation from a panel that announced its decision on Wednesday after months of wrangling.
Shares in E.ON and RWE jumped 3.2 and 5.5 percent respectively on the news, with traders saying the proposal could remove the single biggest concern investors have regarding German utility stocks.
The utilities, hammered by plunging power prices and a shift towards renewable energy, however argued that the proposals were still more than they could afford.
The government-appointed commission agreed to ask the power firms to pay 23.3 billion euros ($26.4 billion) into a state fund to cover the costs of nuclear waste storage — close to the minimum sum in a range that had been previously discussed.
The legacy costs stem from Germany’s decision to end nuclear power by 2022 following Japan’s Fukushima disaster five years ago.
The figure confirmed an earlier Reuters story and is regarded as a favorable deal for the country’s ailing power firms, which have been under immense pressure over fears the costs for the clean-up could be higher.
“It was the commission’s task not to sacrifice the cow now if you have to milk it for the next decades,” said Matthias Platzeck, former prime minister of the state of Mecklenburg-Vorpommern and co-chairman of the nuclear commission.
Utilities, however, argue that they a sum of 17.2 billion euros already set aside for storage should be sufficient. Sources had told Reuters they had been willing to pay a maximum surcharge of about 4 billion euros.
But the commission’s recommendation implies a surcharge of 6.1 billion euros on top of existing storage provisions. The funds are to be transferred in cash in several steps by 2022.
“In the interest of an agreement the utilities have made transparent their economic background and offered to go to the limit of their capabilities,” Germany’s power firms said in a joint release.
“The commission proposal for a so-called surcharge goes beyond that limit.”
In exchange for the payment, Germany’s “big four” energy firms - E.ON, RWE, EnBW and Vattenfall [VATN.UL] - will be able to shake off long-term liability for radioactive waste storage, the most complex, costly and timely aspect of nuclear decommissioning.
Investors have been dumping utility stocks over concerns the power firms, already burdened by tens of billions of euros in debt, could remain liable for waste storage for ever.
The recommendations will serve as the basis for talks between the government and utilities. It is generally expected that the government will adopt the commission’s proposals.
($1 = 0.8840 euros)
Writing by Christoph Steitz and Joseph Nasr; Editing by Keith Weir