RWE offers German government billions in nuclear profits in exchange for plant lifetime extensions

17 August 2010 – Germany’s utilities are offering to pay the government billions to let them keep their nuclear power plants running longer instead of shutting them down as mandated under current law, energy giant RWE AG has said.

The companies also want the government to back off a proposed tax on nuclear fuel as part of the deal, reports the Associated Press. “We are proposing to hand over half of our additional profits from longer nuclear plant production times to the government,” RWE CEO Juergen Grossmann told the Bild newspaper.
He did not give a figure, but experts have estimated additional profits for all of Germany’s 17 nuclear power plants at around EUR4-5bn ($5-7.7bn) a year.
The government confirmed that it is conducting talks with the four utilities that own the nuclear plants, but spokesman Steffen Seibert gave no details. “The negotiations with the Finance Ministry are ongoing,” he said. The Finance Ministry added that a decision is to be expected by the end of the month.
The exchange is the latest turn in Germany’s debate over plans to revise a decade-old decision to abandon nuclear power by 2021.
Chancellor Angela Merkel’s government has said it wants to extend production times as nuclear power is seen as almost free of greenhouse gas emissions and Germany has tough self-imposed climate goals. But Merkel has not decided how much longer the plants should be online.
Earlier this summer, it announced plans for a nuclear fuel tax expected to bring in EUR2.3bn a year from 2011 on — a move that prompted fierce opposition by the energy companies. Last week, German media reported the utilities might offer up to EUR30bn if the government cancels the fuel tax.
Spokesman Seibert said it is essential for the government to generate the tax’s expected annual income of EUR2.3bn but “the form of payment is being debated.”
Whether or not there will be a fuel tax has to be decided by September 1, the date the government wants to send its 2011 budget laws to parliament, a spokesman for the Finance Ministry, Martin Kreienbaum, added.
In contrast, the government will not announce before the end of September how much additional production time the nuclear power plants will be granted, Seibert said. That decision will be part of a “comprehensive energy concept” which is to define which energy sources — nuclear, fossil, or renewables — Germany is going to rely on in the future.
The government is divided on what role nuclear power should play in that concept. While Environment Minister Norbert Roettgen is lobbying for a “moderate” extension of up to eight years, others in Merkel’s conservative Christian Democratic Union want to add as much as 20 years to plants’ lifetime.
The utilities themselves demand “a solid two-digit number of addition years, in any case no less than 15 years,” Johannes Teyssen, CEO of E.ON AG, told Bild.
Germany’s opposition parties are up in arms against the government striking a deal with the utilities rather than setting the new production times by law and imposing the new tax. The Social Democrats, in power with the Greens when the nuclear shutdown was negotiated with the utilities in 2000, said they will go to court unless both houses of parliament get to decide on the extension of nuclear production times.