German Nuclear Operators Must Pay $26.4 Billion for Storage

  • That's the recommendation from a government-appointed panel
  • Operators seeking deal to secure financial market visibility

RWE AG, EON SE and other German utilities will probably have to pay 23.3 billion euros ($26.4 billion) to cover the costs of storing their nuclear waste once they close their reactors.

That’s what a government-appointed panel recommended that the four operators should fork out in exchange for having the state assume unforeseen liabilities associated with the waste storage exceeding that figure, Juergen Trittin, one of the heads of the 19-member panel said at a press conference in Berlin. RWE rose the most in more than two months, while EON climbed to the highest level since Feb. 5.

“It’s a starting point for negotiations and this number is the worst it can go to,” Deepa Venkateswaran, a senior utilities analyst at Sanford C. Bernstein said Wednesday by phone from London. “I don’t think the utilities will end up paying this much. If they thought this number was acceptable it would have been agreed already.”

The companies -- which also include Vattenfall AB’s German unit and EnBW AG -- offered 21.8 billion euros, according to people familiar with the matter. The panel’s unanimous recommendation will be sent to Chancellor Angela Merkel’s Cabinet, which must then draft a law for parliament to consider.

“This is a fair result that takes into account the needs of taxpayers and of the utilities,” said Ole von Beust, co-chair of panel. “The fact that it was passed unanimously by the commission will make it easier for the utilities to decide whether to support it.”

RWE shares jumped as much as 8.7 percent to 13,47 euros, the highest price since Nov. 9, and traded at 13.09 euros at 4:57 p.m. in Frankfurt. EON rose 4.8 percent to 9.50 euros.

Pressure has risen to determine how much the industry must pay when the last of the country’s eight reactors close in 2022 amid concerns that investors will punish RWE and EON if a line isn’t drawn under their nuclear liabilities. Politicians also fret a deal must be clinched before the legislative summer recess after which campaigning will kick off before federal elections next year. Merkel’s government decided to pull the plug on the 60-year-old nuclear industry in 2011 after the Fukushima catastrophe in Japan.

Further Talks

The proposal isn’t binding and may be a base for utilities and the government to base further negotiations on, EON Chief Executive Officer Johannes Teyssen told reporters Tuesday on a conference call ahead of its capital market day.

The commission’s proposals “overburden energy companies’ economic capabilities,” the four utilities said Wednesday in identically worded statements. “The temporary and final storage of nuclear waste in Germany is an operative task of the German government who is politically responsible for this.” The utilities “are still interested in achieving a consensual solution.”

The utilities have already earmarked about 17 billion euros on their balance sheets to pay for the storage. The latest discussions focused on how much they’d have to provide beyond that figure to put a cap on their commitment.

In total, the utilities have already set aside 40 billion euros to wind down their nuclear reactors. That money, along with the 17 billion euros for storage, also includes funds for other costs such as decommissioning the reactors and restoring the land they’re built on.

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