Merkel Rebuffs E.ON, RWE on Nuclear Tax, Demands Alternatives

Chancellor Angela Merkel challenged German atomic-power plant operators E.ON AG and RWE AG to come up with alternatives to a planned tax on nuclear fuel that they oppose, sharpening her conflict with utilities and industry.

Merkel, in her first television interview since returning from summer vacation, refused to budge on the tax on utility profits announced in June, saying the government needs the 2.3 billion euros ($2.9 billion) in annual revenue.

“We have suggested a tax and as long as there’s no other proposal on the table, we’ll stick with it,” Merkel told ZDF television in Berlin in an interview aired late yesterday. “We’re ready to talk with the energy companies if there are other proposals, but I don’t see any yet.”

Merkel, whose coalition’s approval ratings are at historic lows, is taking on the utilities while crafting an energy policy for Europe’s biggest economy that includes extending the operating life of nuclear plants. E.ON and RWE, two of the worst-performing members of the benchmark DAX index this year, have threatened to close nuclear plants ahead of schedule if the tax goes ahead and said the levy would hurt investment.

Shares in Dusseldorf-based E.ON, Germany’s largest utility, rose 0.1 percent to 22.73 at 9:08 a.m. in Frankfurt today. Essen, Germany-based RWE, the country’s second-largest utility, rose 0.3 percent to 53.66 euros. E.ON has dropped more than 22 percent this year, while RWE fell over 21 percent. Of the 30 DAX companies, only HeidelbergCement AG has performed worse.

‘Courage and Realism’

Merkel is also rebuffing the chiefs of leading industrial companies including Siemens AG and ThyssenKrupp AG, as well as Deutsche Bank AG’s Josef Ackermann, who joined the utilities in signing an open letter to Merkel. She should show “courage and realism” by extending nuclear power and ditching the fuel tax, they said in the letter, published in newspapers on Aug. 21. Energy companies shouldn’t have to fix the budget deficit, they said.

Merkel’s Cabinet is due to discuss the tax on Sept. 1, before she presents the government’s energy strategy by the end of September. “I expect the Cabinet will approve it on Sept. 1,” Deputy Finance Minister Werner Gatzer, who is leading talks with the utilities, said in an interview in Berlin yesterday.

Merkel, who will hold talks with RWE Chief Executive Officer Juergen Grossmann at the company’s Emsland atomic plant on Aug. 26, appealed for “another four weeks” of patience before the government unveils its plans. “I can only advise everyone that we need to do this thoroughly,” she said on ZDF.

Planned Phase-Out

Germany’s 17 nuclear plants are due to close by about 2022 under a law approved by a previous government. Merkel’s second- term government came to power in October last year on a platform that included overturning the law.

The government is working on scenarios for an extension of nuclear power of four to 28 years, Merkel said. A government- commissioned report laying out the options is due to be published on Aug. 27.

The extension probably can’t exceed 10 years if Merkel wants to avoid a vote in the upper house of parliament, where her coalition lacks a majority, Sueddeutsche Zeitung reported today, citing people close to the government it didn’t name.

Utilities, German states such as Bavaria and Baden- Wuerttemberg and Economy Minister Rainer Bruederle have urged a longer reprieve. E.ON Chief Executive Office Johannes Teyssen called for a minimum 15-year extension beyond 2022, according to comments in Bild newspaper on Aug. 16.

Protesters from across Germany are planning to converge on Berlin on Sept. 18, promising a “hot autumn” of opposition to Merkel’s nuclear policy.

“We’ll still require a major effort to persuade people to support the longer running times,” Hermann Groehe, general secretary of Merkel’s Christian Democratic Union, told Bild newspaper yesterday.

To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net

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