German Government Considers Nuclear Power-Plant Operators' Fund Proposal
Germany’s government may drop a plan to tax nuclear fuels and instead accept an industry proposal to receive revenue from a fund, financed by nuclear power-plant operators, in exchange for extending reactors’ operating lives.
The government is considering alternative ways of collecting 2.3 billion euros ($2.9 billion) a year from nuclear- energy producers while also promoting renewable energy sources by diverting some of the profit utilities make by letting their nuclear reactors run longer.
A contract between the utilities and the government “could be an attractive alternative to a new fuel-rod tax,” Michael Fuchs, the Christian Democratic Union’s deputy leader in parliament, said in an interview in Berlin today. “Support for the contract and its key proposal of a foundation is potentially attractive to CDU lawmakers, but a condition would be a substantial extension of nuclear power.”
Chancellor Angela Merkel’s attempt to overturn the planned phasing-out of nuclear energy approved by a previous administration is hampered by political division in her CDU party, legal obstacles and the fact that the opposition- controlled upper house of parliament may block an extension beyond the agreed 2021 cut-off date.
The Justice and Interior ministries have said the government can bypass the Bundesrat provided the extension is limited to 10 years, Sueddeutsche Zeitung reported today, citing unidentified people close to the government. Fuchs and the southern states of Bavaria and Baden-Wuerttemberg favor an extension of as much as 20 years.
Illegal?
A tax on nuclear fuel rods, originally championed by the government, may be illegal because it would discriminate against atomic energy, Spiegel magazine said on July 5, citing an opinion by law firm Clifford Chance LLP. Nuclear fuel rods are radiating sticks that are used to heat water in a reactor.
For legal, economic and political reasons, the government should sign a contract with E.ON AG, RWE AG, EnBW Energie Baden- Wuerttemberg AG and Vattenfall Europe AG that spells out runtime extensions and financial benefits it would get, Handelsblatt said on Aug. 11, citing the industry’s proposal. The plan calls for the establishment of a foundation that administers the fund into which nuclear companies pay and which disburses money to the government.
What matters to Finance Minister Wolfgang Schaeuble “is the amount,” Finance Ministry spokesman Bertrand Benoit said today by telephone, adding there is no indication in which direction talks are going. Merkel’s Cabinet will decide on the matter at a Sept. 1 meeting, he said.
A broad contract that channels profit from extending nuclear power to research and development of storage and transmission of renewable energy is preferable to using the windfall to plug budget gaps, and it serves Germany’s climate goals, Fuchs said.
Shares of Dusseldorf-based E.ON and RWE, based in Essen, have each dropped more than 20 percent this year, making them the two worst performers on the benchmark DAX index after bottom-placed HeidelbergCement AG. Utilities have said they may cut investment in power plants, natural-gas pipelines and other energy assets as the nuclear tax eats away at annual earnings.
To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.
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