RWE, EON Rise as Atomic Panel Said to Favor One-Time Payment

  • German nuclear plant operators among biggest DAX gainers
  • Government commission favors option over follow-up liability

EON SE and RWE AG were among the biggest gainers on Germany’s benchmark stock index as a government commission reviewing the nation’s nuclear energy exit was said to favor utilities making a one-time insurance payment to help cover clean-up costs.

EON increased as much as 4.2 percent, and RWE climbed 3.6 percent. The DAX index was up 1.9 percent in its first advance in three days.

A single risk payment would compensate the government for agreeing to take on some of the utilities’ decommissioning responsibilities. A majority of the cross-party panel prefers that option to a plan where plant operators would still have a limited liability for future clean-up costs, said people with knowledge of the talks who asked not to be named as the private meetings haven’t finished.

“A one-time payment would be far more positive” than a follow-up liability, Peter Crampton, an analyst at Macquarie Group Ltd., said Thursday by phone from London. “The market is interested in the mitigation of a risk that is very large for interim and final storage.”

EON gained 3.2 percent to 8.506 euros by 2:57 p.m. in Frankfurt, while RWE was trading up 2.8 percent at 10.45 euros a share.

The commission is discussing the wind-down of the nuclear industry, which will see the last eight operational plants closed by 2022, amid concern that unlimited liabilities may torpedo the firms’ viability in capital markets. German society’s support for atomic power since the 1960s has also been cited as a reason for sharing the decommissioning burden.

One-Time Payment

The government would be responsible for the intermediate and final storage of nuclear waste, which is estimated to cost 17.7 billion euros ($19.5 billion), according to a draft proposal. The one-time payment may be at least an additional 30 percent of the reserves already set aside by EON, RWE, Vattenfall AB, Energie Baden-Wuerttemberg AG and Stadtwerke Muenchen GmbH for storage costs, said two of the people.

Utilities would make the single payment to the government by 2022. They would remain responsible for reactor decommissioning as well as packing and transporting waste at an estimated cost of 29.6 billion euros.

The commission’s final proposal is due after its last meeting scheduled for Feb. 29. It will be presented to the government, which will start negotiations with operators.

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