RWE Slumps Most Since '99, EON Plunges on Atomic Cleanup Concern

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  • Shares of Germany's largest utilities plunge 13 percent
  • Stress-test results on plant-disposal provisions not finalized

Germany’s largest utilities EON SE and RWE AG fell the most in as much as 16 years on concerns their provisions for decommissioning nuclear plants may be insufficient.

RWE slumped as much as 14 percent, the most since January 1999, to 10.18 euros a share, while EON fell 13 percent in its steepest decline since November 2012. Spiegel magazine reported that Germany’s utilities lack as much as 30 billion euros ($34 billion) to pay for the disposal of nuclear waste.

German Economy Minister Sigmar Gabriel called the report “irresponsible speculation,” and said there’s neither a draft nor a final result of the stress tests that were called for by atomic plant operators, according to a statement. Chancellor Angela Merkel’s government decided in 2011 to exit nuclear power after the Fukushima disaster in Japan, with eight remaining reactors due to be taken offline by 2022 at the latest.

“Investors will need to brace themselves for some potentially negative newsflow around this topic, given that the government may want to suggest a nuclear fund for some or all of the nuclear liabilities and could have every
incentive to overstate the risks of provisions not being funded,” Sanford C. Bernstein & Co. analysts, led by Deepa Venkateswaran, said Tuesday in a note to clients. 

EON fell to 7.46 euros a share, the lowest since the company was established in 2000, before paring the loss to 8.065 euros by 4:16 p.m. in Frankfurt. RWE plunged to the weakest since at least August 1992 when Bloomberg started compiling data on the stock. Trading volume for both companies was more than three times the three-month daily average about an hour before the market close.

“Current numbers games are no basis for concrete policy,” said Gabriel, who saw no reason for the negative market reaction.

Adequate Provisions

“Provisions are appropriate, adequate and properly accounted for” with regard to the final storage of atomic waste, EON said in an e-mailed statement. The assumptions in the negative stress-test scenario that Spiegel reported are “implausible” and lead to “unrealistic” provision requirements, the Dusseldorf-based utility said.

EON and RWE both said the stress test results aren’t yet final.

Provisions by Germany’s four atomic operators have a “realistic dimension” when compared with the standards used in Switzerland, where decommissioning provisions are relatively high, Joachim Pfeiffer, an economy spokesman for Chancellor Merkel’s Christian Democratic Union party, said Tuesday in an e-mailed statement.

Utilities Energie Baden-Wuerttemberg AG and Vattenfall AB also run German nuclear plants.