April 4 (Bloomberg) -- German Chancellor Angela Merkel announced spending on new power plants to bring down record power prices and secure energy supplies, though succeeded only in stoking disagreement within the ``grand coalition'' over the future of nuclear power.

Shares in utilities fell today after Merkel told reporters that utilities including E.ON AG and RWE AG plan to invest 30 billion euros ($35.6 billion) in new power stations and power grids by 2012. Renewable energy suppliers plan to invest as much as 40 billion euros during the period, she said.

``We think that the future of our country depends on a secure energy policy,'' said Merkel yesterday following an evening meeting with energy executives and consumer groups in Berlin. ``We want to reduce our dependency on energy imports and to prevent energy prices rising further.''

Power prices on the German wholesale market have more than tripled in five years and cost 0.4 percentage points in the country's economic growth each year, according to the DIW economic institute. Utilities say the problem is exacerbated by a government commitment to close Germany's nuclear plants by the early 2020s.

Utilities' requests to extend the lifespan of their nuclear- power stations was aired and will remain on the table, Economy Minister Michael Glos told reporters after the meeting.

``The discussion about power, including the extension of the lifespan of nuclear power stations, dominated parts of the summit,'' Frank Asbeck, chief executive of Solarworld AG, a German maker of solar cells, who also took part in the meeting, said in an interview.

Nuclear `Most Profitable'

Utilities want to maintain the country's nuclear power capacity, which accounts for about a third of German power generation. Nuclear plants are the most profitable means of generating electricity in Germany.

Phasing out nuclear power, currently also the cheapest form of energy generation in Germany, would lead to further electricity-price increases, executives including EnBW Chief Executive Utz Claassen have said. Some members of Merkel's Christian Democrats also oppose the phase out.

The phase-out plan was agreed in 2000 by the previous SPD- Green Party administration. Some investors and utilities' hopes were raised that the commitment might be overturned after the CDU emerged from last year's elections as the majority partner in a coalition government with the SPD.

These hopes were quashed today by Environment minister Sigmar Gabriel, a member of the Social Democrats, who told N24 television the government position on nuclear energy was ``unequivocal.''

``We've said we're getting out'' of nuclear power generation, Gabriel said. ``That remains the case. It's in the coalition treaty.''

Shares Slide

E.ON shares fell as much as 1.06 euros, or 1.16 percent, to 90.09 euros and traded at 90.76 euros at 15:30 p.m. in Frankfurt. RWE dropped as much as 1.11 euros, or 1.54 percent, to 71.12 euros and traded at 71.40 euros in Frankfurt.

``The Christian Democrats didn't do anything more than repeat their stance that they want to extend the lifespan of nuclear power plants,'' said Claudia Kemfert, who is responsible for energy issues at the Berlin-based DIW economic institute. ``To work toward this goal Merkel would have to be more proactive. Opposition from the social democrats seems to have prevented that.''

Unlike in the past, a majority of Germans is now in favor of extending the lifespan of nuclear power stations beyond 2021, according to a survey by Emnid research institute for N24 television. Fifty five percent of Germans are for an extension and 37 percent against, according to the survey of 1,000 conducted March 3. Some 53 percent of SPD voters were in favor, with 40 percent against. The margin of error was 2.5 percent.

Commitment Unclear

Before the summit, energy providers including E.ON, RWE, Vattenfall Europe AG and Energie Baden-Wuerttemberg AG had already said they plan to invest 40 billion euros in new plants by 2020 and the same amount in networks. Merkel didn't say how yesterday's commitments differed from the previous statements.

The summit was the start of a process aimed at drafting a new energy policy for Germany through 2020. Merkel said the policy, due by mid-2007, will focus on power prices as well as security of supply, energy efficiency and other topics.

The Chancellor said she plans to meet utilities again in September. The government will invest 2 billion euros before 2009 in energy-saving technologies, she said.

Merkel had called the summit partly because of concern about over-dependence on Russia, from where Germany gets more than 40 percent of its natural-gas supplies. Russian gas operator OAO Gazprom halted supplies to Ukraine on Jan. 1 amid a dispute over prices.

Carbon Emissions

The government is considering giving utilities fewer allowances to emit carbon dioxide, Gabriel said yesterday. He wants to lower ``windfall profits,'' as the trading of emission allowances contributed to the increase in power prices and led to rising profits for power generators. Certificates are worth about 27 euros each now, after governments in the European Union gave them out for free.

Germany may exempt larger power users from the need to further cut emissions, Gabriel said, by giving them more certificates and by handing out fewer certificates to utilities. He rebutted speculation the German government may auction as much as 10 percent of the certificates.

Since the beginning of last year utilities in the European Union must have certificates for each ton of carbon dioxide they emit. The requirement was brought in to reduce emissions of the gas linked to global warming.

Governments in the EU have distributed certificates for a first period of trading, which will last until 2007, and are due to release allocations for companies for the next period of trading from 2008 to 2012 in the middle of this year.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Peter Dinkloh in Frankfurt at pdinkloh@bloomberg.net.

Last Updated: April 4, 2006 10:22 EDT