RWE AG (RWE), Germany’s second-biggest utility, plans to counter a “challenging” year by cutting investments by as much as 50 percent to offset losses from the phasing out of nuclear power in the country, Chief Executive Officer Peter Terium said.
“We want to increase efficiency and therefore we’ll continue to cut costs and boost revenue,” Terium told reporters yesterday at a company event in Davos, Switzerland. The Essen- based company may lower annual spending to 3 billion euros ($4 billion) to 4 billion euros from 5 billion euros to 6 billion euros, he said.
Germany’s two biggest power generators, EON SE and RWE, are trying to cope with Chancellor Angela Merkel’s energy reforms aimed at cutting carbon emissions while ending the use of nuclear power. The decision, made after Japan’s Fukushima disaster in 2011, may drive up energy costs for consumers and hurt the competitiveness of Germany’s industrial companies, especially as rivals in the U.S. such as Dow Chemical Co. benefit from the domestic shale-gas boom, Terium said.
The German utility will use “various levers” to boost efficiency, the CEO said. He declined to comment on potential job cuts, saying only that the closure of some power plants means positions will be lost, though they may find work in different businesses.
Terium called on German utilities to look beyond their borders to Europe to face critical energy issues, though he said there are no current plans to merge with another European company.
“Two blind people doesn’t create a visionary,” Terium said, when asked whether he’d consider a merger with companies such as Iberdrola SA. While RWE can’t entirely rule out such a combination in the future, it’s currently focusing on mastering the challenges on its own, he said.
RWE, which is trying to sell assets to raise as much as 7 billion euros in proceeds by the end of 2013, has struggled to reach that goal. The German utility refuses to sell assets for less than their value, Terium said.
To contact the reporter on this story: Aaron Kirchfeld in Davos, Switzerland at email@example.com.