Germany’s Largest Utilities Fall as Country Keeps Tax in Atomic Phase-Out

EON AG and RWE AG (RWE), Germany’s largest utilities, fell in Frankfurt after Chancellor Angela Merkel’s coalition said it will maintain a tax on nuclear plants while phasing out the power source. Renewable energy stocks gained.

EON lost 1.6 percent to 19.71 euros as of 11:06 a.m. local time while RWE fell 2.3 percent to 40.06 euros, the lowest price in 6 1/2 years. Solarworld AG, a solar panel maker, gained 6.3 percent. Nordex SE, a wind turbine producer, soared 12 percent.

Merkel plans to exit atomic energy by 2022 and won’t allow seven reactors idled for safety checks to restart after the disaster at a Japanese nuclear plant in March stoked safety concerns. While investors probably saw that coming, some may have expected the government to scrap the tax on nuclear fuel, said Bernhard Jeggle, a Landesbank Baden-Wuerttemberg analyst.

“The exit was coming, most people were clear about that, but that the tax would stay could be negative for the stocks,” said Jeggle. “EON is hit hardest in total, but if you compare market capitalizations, then EON and RWE are about level,” while nuclear operator EnBW Energie Baden-Wuerttemberg AG (EBK) would lose the most in terms of capacity.

The tax on spent fuel rods will remain even as the shutdown proceeds, German Environment Minister Norbert Roettgen told reporters following the late-evening coalition talks in Berlin. The levy, introduced this year, is designed to help pay the clean-up of a nuclear waste storage site.

Legal Options

Merkel said in March she sought to accelerate the shutdown of Germany’s atomic power plants following Japan’s Fukushima disaster, the worst nuclear crisis since Chernobyl in 1986. The decision reversed a 2010 plan to extend the operation of the facilities by an average of 12 years.

“The planned running times are not what we consider to be necessary in the context of the energy situation,” Juergen Frech, a spokesman for Essen, Germany-based RWE, said in an e- mailed response to questions from Bloomberg News. “We will keep all our legal options open.”

Vattenfall has noted the decision and will wait until plans for Germany’s policy overhaul are submitted to Cabinet on June 6 before publishing a statement, Barbara Meyer-Bukow, a Hamburg- based spokeswoman for the utility, said today by phone.

‘Many Questions’

“We were not involved in the negotiations and talks and only know what is being reported today in the media,” Ulrich Schroeder, a spokesman for Karlsruhe, Germany-based EnBW, said today in an e-mailed response to questions from Bloomberg News. “What we hear there throws up many questions including energy, technical and economic issues which we can’t currently answer.”

Officials at EON didn’t immediately respond to e- ailed requests for comment.

Nuclear power accounted for 23 percent of German power last year while generation from renewable sources made up 17 percent, according to the Berlin-based BDEW utility group. Merkel has said she wants to speed the transition to renewable energy and that natural-gas-fired plants will help avoid a shortfall.

Finance Minister Wolfgang Schaeuble said in July last year that while the tax is independent of the extension, they “are linked in a political context.”

“The seven oldest reactors that have been placed under a moratorium and the Kruemmel nuclear power plant won’t go back online,” Roettgen said. “A second group of six nuclear power plants will go offline at the end of 2021 at the latest and the three most modern power plants will go offline 2022 at the latest.”

Roettgen said there won’t be a revision clause, meaning there’s “clarity about the end” of nuclear power in Germany that can’t be turned back.

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

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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