EON to Close Atomic Reactor in BMW’s Backyard 7 Months Early

EON SE (EOAN) wants to shutter a nuclear plant in Bavaria seven months ahead of schedule, cutting power capacity in the home of Bayerische Motoren Werke AG (BMW) and Siemens AG as Germany’s biggest utility tries to save money.

EON notified the Bundesnetzagentur regulator and the grid operator of its plan to close the 1,275-megawatt plant at the end of May 2015 “because of its lack of profitability,” the Dusseldorf-based utility said in a statement.

Grafenrheinfeld, in operation since 1982, was due to shut under Chancellor Angela Merkel’s policy to switch off all atomic plants by 2022 and replace them with renewable energy. The early closing will save EON as much as 80 million euros ($110 million) in nuclear-fuel taxes, TV station ARD Haupstadtstudio said today. EON shares rose to the highest in more than a month.

The decision was “unavoidable,” EON said. “The continued operation of nuclear power stations in Germany only makes economic sense if they can operate for a sufficient length of time without the burden of the nuclear-fuel tax,”

Grafenrheinfeld’s early closure will “strongly” drive up costs for consumers, said TenneT TSO GmbH, the grid operator.

TenneT will have to “starkly increase interventions in the market to stabilize the grid,” Chief Executive Officer Martin Fuchs said in an e-mailed statement. TenneT already makes about 1,000 such interventions a year at a cost of 150 million euros, to be paid by consumers.

TenneT doesn’t expect the shutting to endanger supply security in the months from June until year-end, it said.

Declining Profit

The retirement of the nation’s oldest reactor still in operation comes as EON seeks to cut costs amid declining profit. The nuclear fuel tax set by Merkel is “strangling” EON’s reactors because it’s coincided with lower wholesale power prices, the utility said in October. EON reduced its workforce by more than a quarter to 62,000 in the past three years.

Under German law, utilities have to ask the regulator and the grid operator to shut a plant one year in advance.

RWE AG’s 1,284-megawatt Grundremmingen B reactor, also located in Bavaria, is next on the list, with a planned close by Dec. 31, 2017.

EON rose 2 percent to close at 14.21 euros, the most since Feb. 24.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Alex Devine, Tony Barrett

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