Merkel Standing by Nuclear Windfall Tax, FDP Coalition Lawmaker Breil Says
Germany's Chancellor Angela Merkel
Hannelore Foerster/Bloomberg
Germany's Chancellor Angela Merkel said, “I want us to meet our goals in budget consolidation and we’re looking at a certain payment from the nuclear plant operators.”
Germany's Chancellor Angela Merkel said, “I want us to meet our goals in budget consolidation and we’re looking at a certain payment from the nuclear plant operators.” Photographer: Hannelore Foerster/Bloomberg
Merkel Stands by Nuclear Windfall Tax, Coalition Lawmaker
Hannelore Foerster/Bloomberg
Merkel was visiting an RWE atomic power plant in northwestern Germany, where she held talks with RWE and E.ON executives.
Merkel was visiting an RWE atomic power plant in northwestern Germany, where she held talks with RWE and E.ON executives. Photographer: Hannelore Foerster/Bloomberg
The German government stands by its plans to impose a windfall levy on utilities for any extension of the operating life of nuclear plants as well as a 2.3 billion-euro ($2.9 billion) fuel tax, a coalition lawmaker said.
“Windfall profit will be distributed among the budget, research and development and the companies,” Klaus Breil, the energy spokesman in parliament for the pro-business Free Democratic Party, said today in an interview in Berlin. “It will be separate” from the fuel tax announced in June.
While Chancellor Angela Merkel’s government committed in its coalition agreement in October to a windfall tax on E.ON AG and RWE AG to promote renewable energy, it has sidestepped the matter since announcing the separate fuel levy amid opposition from the utilities. Merkel may drop the windfall tax altogether, the Sueddeutsche Zeitung reported on Aug. 23, citing unnamed people close to the government.
“Everyone knows the coalition contract,” said Breil, whose FDP is Merkel’s junior coalition partner, rejecting suggestions the windfall tax may be shelved. About half of the profit from an extension might be retained by Germany’s four nuclear operators and the remainder split by the government between renewable projects and the budget, he said.
Shares in Dusseldorf-based E.ON, Germany’s largest utility, were down 6.5 cents to 22.04 euros at 5:27 p.m. in Frankfurt. Essen-based RWE, the country’s second-largest utility, fell 31 cents to 51.95 euros. E.ON has dropped more than 24 percent this year, while RWE fell over 23 percent. Of the 30 DAX companies, only HeidelbergCement AG has performed worse.
Merkel’s Tour
Merkel continued her tour of German power sites today as her coalition negotiates the detail of an energy package to be announced at the end of next month. The chancellor favors extending nuclear licenses beyond a planned nuclear power phase- out date of about 2022 approved by a previous government.
“I want us to meet our goals in budget consolidation and we’re looking at a certain payment from the nuclear plant operators,” Merkel said during a visit to an RWE atomic plant in northwestern Germany, where she held talks with RWE and E.ON executives. “We will also talk about how the energy industry can make a contribution to renewable energies.” She said the details would be negotiated “at another time.”
‘Chaotic’ Talks
Government prevarication over setting clear goals in talks with the utilities poses a risk to gaining an accord soon, said Theo Kitz, an equity analyst at Merck Finck & Co. in Munich, who on Aug. 13 recommended investors sell RWE shares.
“The talks appear chaotic, every day we hear contradictory statements and the stakes seem to become more and more complicated,” Kitz said today in a phone interview. “I fear more delays and that doesn’t bode well for the outcome.”
An extension of nuclear plants’ operating lifespans would yield combined profit of about 6.4 billion euros per year, the DIW economic institute said in a July 29 report. While Germany’s four biggest energy companies, RWE, E.ON, EnBW Energie Baden- Wuerttemberg AG and Vattenfall Europe AG, have said they’re prepared to share that profit, they reject being subjected to a fuel tax.
The companies, responsible for generating about 70 percent of Germany’s power, threatened to shut down the remaining 17 nuclear reactors early if the tax is implemented, Der Spiegel magazine reported Aug. 14. Merkel said Aug. 23 the government will “stick with it” in the absence of alternative proposals. The Cabinet is set to discuss the levy on Sept. 1.
“We’ve made it clear that we don’t view the fuel-rod tax as the appropriate instrument,” RWE Power AG executive board member Gerd Jaeger said on ARD television today. “We have proposed channeling the money into a fund from which to finance the expansion of renewable energy.”
The government’s insistence on dual levies is a victory for Environment Minister Norbert Roettgen, who said late yesterday that he favors “the implementation of them both.”
To contact the reporters on this story: Patrick Donahue in Berlin at at pdonahue1@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.
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