German utilities set for
compensation after court win on nuclear
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[December 06, 2016]
By Christoph Steitz and Vera Eckert
(Reuters) - Germany's highest court ruled on Tuesday that hastening the
shutdown of nuclear plants after Japan's Fukushima disaster violated
some of the property rights of utility companies, allowing them to seek
Utilities E.ON <EONGn.DE>, RWE <RWEG.DE> and Vattenfall [VATN.UL] sued
the German government, arguing the decision to close all nuclear plants
by 2022 amounted to expropriation.
Berlin said nuclear risks had changed as a result of the Fukushima
meltdown in 2011, caused by a tsunami following a 9.0 magnitude
earthquake. Its move to end nuclear power has been welcomed by a
majority of German voters.
The ruling suggests that utilities will only be able to recoup a
fraction of the 19 billion euro maximum ($20.4 billion) of damages they
are seeking, while actual payments could take years due to lengthy court
cases that are expected to follow.
"It is certainly true that this is not about the billions of euros in
compensation that have been mentioned by the media," a spokeswoman for
RWE, Germany's largest electricity producer, said, echoing comments from
Germany's environment minister.
Shares in E.ON and RWE jumped on the news and were up 4.7 and 2.9
percent at 1251 GMT, despite the likely delay in receiving any
The constitutional court in Karlsruhe said the government's actions in
2011 were partly incompatible with ownership laws and also robbed
Vattenfall and RWE of production allowances that were allocated in 2002.
Furthermore, the law does not include compensation for lost investments
utilities made between December 2010 and March 2011, after an extension
to the life spans of nuclear power plants agreed in late 2010.
The government must provide new legislation to address these issues by
June 30, 2018, the court said.
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Anti-nuclear badges are offered for sale during a demonstration at
Biblis nuclear power plant June 19, 2011. REUTERS/Ralph Orlowski/File
"Setting rules for compensation can take several years and it is unclear how
much money the companies will be awarded," said Roland Vetter, of PraXis
Partners, a London-based utilities investment specialist.
The utilities need money as they must start contributing next year to a 23.6
billion euro fund in exchange for shifting liability for nuclear waste storage
to the government.
This was agreed with the government in October, removing uncertainty about a
major drag on utility stocks.
"I could imagine that the government will set up a fund to deal with all the
issues at once, including the funding of nuclear waste," said Michael Bormann of
law firm Simmons & Simmons.
(Additional reporting by Tom Kaeckenhoff and Ursula Knapp; Editing by Maria
Sheahan and David Evans)
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