Cocaine, Welfare and Mad Dogs: What EON and RWE Fight in Court

  • German top judges hear lawsuits by EON, RWE and Vattenfall
  • Utilities seek compensation for German nuclear exit policy

EON SE, RWE AG and Vattenfall AB are trying to convince Germany’s top judges that huge losses over the nation’s nuclear-power policy have nothing to do with cocaine, welfare or mad dogs.

The power companies have toiled through two days of hearings at the country’s Federal Constitutional Court, arguing that the national government’s decision to end the use of nuclear energy deprived them of their property. The judges pushed the companies on how the situation was different from the government seizing toxic substances or killing rabid dogs to prevent disease.

"Let’s say the police confiscates cocaine to fight drugs: Would it have to indemnify the owner for the value?" Justice Reinhard Gaier asked at Wednesday’s session. "Another interesting question would be how you’d determine the market price here."

The case centers on Germany’s nuclear policy, which has flip-flopped with political changes and concerns after the 2011 Fukushima disaster in Japan. If the utilities win, EON has said it may seek about 8 billion euros ($8.9 billion) in government compensation.

In 2002, the nation’s ruling coalition, composed of Social Democrats and Greens, decided to end nuclear energy production and reached a deal to allow the companies to produce an amount of power equivalent to 32 years of generation by existing plants.

After the 2009 elections, Chancellor Angela Merkel’s government changed direction. At the end of 2010, the utilities were given new production rights equivalent to another 12 years of running time for the reactors. But just a few months later, in the wake of the Fukushima disaster, Merkel repealed the extension. The government also set closing dates for each plant.

RWE, EON and Vattenfall claim they were arbitrarily deprived of the 2010 production rights since the risks in Germany didn’t change. They argued that the Japanese plant lacked basic security precautions that would have prevented the disaster. Because of the fixed closure dates, the suppliers claim they can’t even make full use of the production rights they won under the 2002 deal because of government miscalculations.

"You can’t compare our rights with cocaine," Benedikt Wolfers, a lawyer for RWE, said. "Cocaine has always been illegal, but nuclear energy was perfectly legal before the rights were taken away by the government."

Under the constitution, it makes a difference whether rights are acquired through work or investment or were simply granted, Justice Gaier said at Tuesday’s hearing. That’s why social-security rights acquired by worker contributions can’t be confiscated while welfare payments can, Justice Gaier said, adding that stripping off the extra 12 years may be similar to the latter.

Christoph Moellers, a lawyer for the government, said the utilities acquired production rights with the caveat that they can be repealed for security reasons. Lawmakers need to be free to regulate dangerous technology without fear of financial repercussions, he said.

A ruling is expected in a few months. The utilities are currently in negotiations with the government over atomic-waste costs and could also settle the cases as part of any deal.

The cases are: BVerfG, 1 BvR 2821/11, 1 BvR 321/12, 1 BvR 1456/12.

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