July 6 (Bloomberg) -- Germany must speed up the closure of aging nuclear power stations following an automatic shutdown at Vattenfall AB’s Kruemmel reactor over the weekend, Environment Minister Sigmar Gabriel said.

“We must pull these older nuclear plants from the grid,” Gabriel said on Germany’s ARD television today. “That means tightening up the legislation we have.”

The 25-year-old Kruemmel reactor halted on July 4 for the second time in a week following a short circuit in one of two transformers. In June, the 1,346-megawatt plant returned from a two-year outage caused by a fault in the other transformer, which led to a fire. Vattenfall said today it doesn’t know when the generator will restart.

The remaining operational life of older reactors could be transferred to newer plants in an amendment to legislation, Gabriel said, referring to the set amounts of power that German reactors are permitted to generate over their lifetime.

Gabriel’s Social Democrats, in coalition with the Greens, passed legislation in 2002 that would phase out nuclear power by about 2021. While the subsequent government has sought to extend the life of atomic plants to provide a “bridge” to greater use of renewables, it has been unable to reverse the law without the consent of the Social Democrats, a coalition partner.

‘Negative Signal’

“A hasty decision to shut down reactors ahead of schedule isn’t appropriate,” Bernhard Jeggle, a Stuttgart-based analyst at Landesbank Baden-Wuerttemberg, said today by telephone. “It would be a clearly negative signal” for German utilities that would have to close their plants.

On June 24, Juergen Grossmann, chief executive officer of utility RWE AG, urged Chancellor Angela Merkel to scrap the reactor closure plan, saying an extension would protect the country from fuel price swings. Germany, which uses more electricity than any other nation in the European Union, got about 23 percent of its power from atomic plants last year, according to the Web site of the country’s nuclear association.

While Merkel’s Christian Democratic Union has maintained its push to extend the life of existing reactors, the party last month ruled out building new nuclear plants and backed plans to develop electric-car technology, aiming to broaden its appeal before the Sept. 27 national elections.

Election Campaign

“It’s clear that Gabriel is trying to gain capital from this,” according to Jeggle, who recommends investors hold shares in RWE and competitor Energie Baden-Wuerttemberg AG. “This is part of the election campaign and one should see it in perspective.”

Since the 2007 halt of Kruemmel, Vattenfall has carried out work to avoid short circuits and eliminate any “serious impact” should such an event occur, the Stockholm-based company said yesterday in a statement.

The German state of Schleswig-Holstein, where the Kruemmel plant is located, will take “days or weeks” to conclude an investigation into the latest incident, Oliver Breuer, a spokesman for the state’s regulator, said today by telephone.

Barbara Meyer-Bukow, a Vattenfall spokeswoman, said earlier today that work to return Kruemmel to the grid will “take some time.” While the fault is in the plant’s other transformer on this occasion, the issue is “otherwise similar,” she said by telephone.

E.ON AG, Germany’s largest utility, owns a 50 percent stake in the power station near Hamburg.

Brunsbuettel Shutdown

The utilities’ 771-megawatt Brunsbuettel reactor has also been shut for two years following a short circuit in the power grid nearby. The outages, which prompted an initial “exodus” of clients, cut first-quarter earnings by 135 million euros ($188 million), Vattenfall CEO Lars Josefsson said in April.

“Safety must always come before speed,” Ernst Michael Zuefle, CEO of Vattenfall Europe Nuclear Energy, said in the statement yesterday, adding that Kruemmel won’t restart until “we have cleared up all technical and organizational matters.”

Of the 17 German atomic plants in operation, EnBW’s Neckarwestheim 1 and units A and B of RWE’s Biblis facility are scheduled to close down next, taking a total of about 3,179 megawatts from the country’s grid in 2010, according to Landesbank Baden-Wuerttemberg research.

Gabriel is seeking the early closure of seven reactors, including Biblis A and B, Phillipsburg 1, Neckarwestheim 1, Brunsbuettel, Unterweser and Isar 1, Michael Schroeren, a spokesman for the Environment Ministry, said today at a Berlin press conference. That’s a total capacity of 6,988 megawatts.

German power prices for today traded in line with last week. Delivery was settled at 44.17 euros ($61.54) a megawatt-hour in an auction on the EPEX Spot SE exchange in Paris.

In the over-the-counter market, power for tomorrow traded at 39.45 euros, according to broker GFI Group Inc.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.

Last Updated: July 6, 2009 06:32 EDT