RWE Gains on Report EU Seeks Green-Tariff Shift: Frankfurt Mover

RWE AG, the largest power producer in Germany, rose to a four-month high on a report that European Union Commissioners Joaquin Almunia and Guenther Oettinger are seeking changes to a guaranteed feed-in tariff for renewables.

RWE advanced 5.2 percent to 26.925 euros, the highest since May 28, and the second-biggest gainer on the Stoxx Europe 600 index. The commissioners seek to replace a fixed-price tariff with a premium to market prices, Frankfurter Allgemeine Zeitung said today. Almunia also aims to curb large-scale consumers’ exemptions from funding feed-in rates, it said.

“The EU Commission repeatedly made clear lately that it is critical of the financial aid,” especially on the exemptions for intensive industry and possible distortion of competition caused by them, Guido Hoymann, an analyst at B. Metzler Seel Sohn & Co. KGaA, said by phone from Frankfurt. “Changes would decelerate the expansion of renewables and drive the wholesale price of power. The big utilities would benefit from that.”

EON SE, Germany’s largest utility, rose 4.1 percent. Exane BNP Paribas upgraded both today, with RWE raised to neutral from underperform and EON to outperform from neutral.

Chancellor Angela Merkel seeks to alter the law to underpin a 550 billion-euro ($747 billion) plan to shut atomic reactors and boost renewables. While Merkel aims for a more market-based approach to cut the plan’s costs, she hasn’t explained how.

The EEG clean-energy subsidy law aimed at raising the share of renewables to 80 percent by 2050 from 23 percent now saddled Germans with the third-highest power prices in the EU. Utility groups VKU and BDEW, as well as chemical industry group VCI, have called for an end to the EEG’s system of giving uncapped above-market payments to developers of clean-energy plants.

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