RWE May Shelve Power Plant Work, Saying German Nuclear Tax Will Sap Cash

RWE AG, Germany’s largest power company, may delay maintenance work at some of its generators to cut costs as a planned tax on the country’s nuclear stations saps cash.

“We have to make cuts in the day-to-day business,” Rolf Schmitz, the company’s management board member for Germany, said today in an interview in Munich. “We’ll put off maintenance halts by a year or two if possible.” Schmitz cited work at coal-fired plants and electricity grid spending as areas where RWE could reduce expenses.

Germany plans to slap an annual 2.3 billion-euro ($2.9 billion) tax on nuclear power plant operators from next year through 2016 as it seeks to trim the budget deficit. That will spur Essen, Germany-based RWE to focus on investments in “growth areas” like renewable energy generation and projects outside of its home market, Schmitz said.

“We can see if we can delay an investment decision in an area that doesn’t hurt so much,” the board member said.

Separately, Schmitz said industrial clients are “holding back” on buying power for the period after 2012 where they carry the cost of carbon dioxide emissions permits needed to produce the greenhouse gas in electricity generation.

RWE gives customers the option of buying their own carbon allowances for electricity delivered after 2012 as the utility tries to hedge against emission prices. The client acquires CO2 allowances for the year of power delivery and transfers them onto the energy company’s account, RWE said in September 2009.

“They have just as much trouble as us in calculating CO2 prices,” the board member said. “We had a really good phase where we sold 10 and 15 megawatt products, but at the moment it is a little slower.”

That could change after the German government presents its energy policy at the end of September as clients will have more information to help gauge the future development of CO2 prices, Schmitz said.

RWE is Germany’s largest power company by installed capacity and the second largest utility by revenue after Dusseldorf-based E.ON AG.

To contact the reporter on this story: Nicholas Comfort in Munich via ncomfort1@bloomberg.net

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