Business World

Tuesday 24 October 2017

German utilities battle government over nuclear ban costs

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Angela Merkel

Christoph Steitz and Tom Käckenhoff

German power firms and government members clashed at a court hearing this week over the country's controversial decision to shut down all nuclear plants by 2022, in a lawsuit that could allow utilities to claim €19bn in damages.

The case pits a struggling energy industry against the government.

Germany's Constitutional Court will examine the arguments of industry giants E.ON, RWE and Vattenfall, who want to be compensated for the decision to accelerate a phase-out of nuclear power.

The hearing comes five years after Japan's Fukushima nuclear disaster, which triggered Chancellor Angela Merkel's move to speed up the nuclear shutdown and reverse an earlier agreement that extended the lifespans of some plants.

"The decision to end the use of nuclear power as soon as possible following the drastic events of Fukushima not only meets legal requirements, it was and continues to be the right decision," Environment Minister Barbara Hendricks told the eight-judge panel.

She said she was confident the government would win the case.

The decision deprived power firms of one of their main sources of profit and pitched them into crisis as the focus moved to renewables while electricity prices tumbled.

The government said at the time that the risks for nuclear power had changed as a result of the Fukushima meltdown that was caused by a tsunami following a 9.0 magnitude earthquake.

Utilities argue the events had no impact on the security of Germany's nuclear stations, while the accelerated shutdown cancelled 1,800 terawatt hours of planned production, enough to power Europe's biggest economy for about three years.

"The risks connected with nuclear energy did not change following Fukushima, just their reception," said Matthias Hartung, head of the power generation business at RWE, Germany's largest power producer.

Johannes Teyssen, chief executive of larger peer E.ON, told the court that the utilities were not disputing the decision to abandon nuclear power, but said fair compensation was needed as part of the reversal.

"We paid our taxes, we paid our wages, we have done what every other company does with its investments," Mr Teyssen told reporters, adding E.ON had invested billions of euros in nuclear technology over the past decades.

While a decision is expected to take several months, the hearing could provide insight into the thinking of the judges' panel, either through its line of questioning or through comments that might hint at its eventual opinion.

Power producers may look beyond Germany for help, if the courts there side with the state.

Vattenfall, whose group headquarters are in Sweden, has also filed a lawsuit with the Washington-based International Centre for Settlement of Investment Disputes (ICSID), where it is seeking €4.7bn in damages.

However, in June 2015, the European Court of Justice ruled that Germany's tax on the use of nuclear energy did not breach European Union laws, dealing a blow to utilities' hopes for a multi-billion euro refund on that score.

Since falling out of official favour the sector has been hit with major bills and levys on everything from the use of fuel rods at nuclear facilities to storage of waste material. (Reuters)

Irish Independent

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