Germany's Nuclear Phaseout: Irate Power Companies to Sue Berlin For Damages

By and Alexander Neubacher

Germany's power companies are preparing to take legal action against the government's decision to shut down their nuclear power plants. They say the new closure plan is too rigid and will prove more costly to them than the previous nuclear phaseout agreed by a center-left government in 2000.

The Isar nuclear power station in Bavaria. In a major U-turn, the German government has decided to phase out nuclear power by 2022. Zoom
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The Isar nuclear power station in Bavaria. In a major U-turn, the German government has decided to phase out nuclear power by 2022.

In the Krümmel nuclear power plant near Hamburg, located on the bank of the Elbe river, Germany's nuclear exit is already a reality. The plant hasn't produced a single kilowatt-hour of electricity for almost two years, after being shut down following various incidents, such as a fire that broke out at the site and a problem with a transformer. Even the owners, E.on and Vattenfall, were doubtful that the plant would ever go back into operation.

But the reactor, which has essentially been shut down, is of considerable value, at least at the moment, and the companies have decided to defend their property. The power company bosses are threatening to sue for billions of euros in compensation, arguing that the decision by the center-right coalition to phase out nuclear energy is even more costly for them than the original closure plan agreed by a previous center-left government in 2000. They stand a good chance of getting the money they claim they are entitled to.

The dispute centers around how the reactors are to be shut down. The government wants to provide each power plant with a fixed expiration date. The plan is based on a proposal by Horst Seehofer, the chairman of the conservative Christian Social Union (CSU) party, who prevailed against the pro-business Free Democratic Party (FDP) in negotiations over the phaseout. The CSU and FDP are junior coalition partners to Chancellor Angela Merkel's Christian Democrats.

The FDP would have preferred a more flexible handling of the plants' remaining life spans, and its chairman, Philipp Rösler, is dissatisfied with the outcome of the negotiations.

Fierce Reaction

For the plant operators, the current plan is the worst of all closure methods debated to date. In the past, they calculated the profitability of their nuclear power plants on the basis of their remaining power output, not in terms of their remaining life spans of weeks and months. The companies are now accusing the government of wiping out these remaining nuclear power production rights with a stroke of the pen.

Consequently, their reaction has been fierce. Jürgen Grossmann, the head of power company RWE, wrote that the phaseout decision constitutes a gross breach of their property rights. E.on CEO Johannes Teyssen says that the companies will incur substantial financial losses. Vattenfall CEO Oystein Loseth is demanding "fair compensation for our losses as a result of the government's decision."

The nuclear plant operators are citing agreements they made with the government of Social Democrats and Greens in 2000 under then-Chancellor Gerhard Schröder, in which each nuclear power plant was allotted a specific amount of electricity that it could feed into the grid until it was shut down. The German Environment Ministry is keeping track of the relevant figures for each plant. According to the plan, as of early January, the 17 German nuclear power plants still had a remaining entitlement to produce about 981,000 gigawatt hours.

Old reactors also have such accounts. For instance, the Krümmel plant near Hamburg, which has already effectively been shut down, still has a contingent of about 88,000 gigawatt hours. The plant operators can sell this amount of electricity and transfer it to other power plants. In other words, the Krümmel contingent is worth a lot of money -- or at least it was, until the government came up with the idea of expiration dates.

The timetable the government has established for the nuclear phaseout is so tight that the utilities will be unable to fully utilize their remaining contingents. As a result, the executives argue, they no longer have the option of transferring electricity contingents. The market, they say, is dead.

'Poorly Drafted Law'

Officials at the companies' headquarters in Essen and Düsseldorf say they will probably file a constitutional complaint as soon as German President Christian Wulff has signed the phaseout law. Specifically, they will invoke Article 14 of the German constitution, which addresses the question of whether the companies' assets are being expropriated, and if they are therefore entitled to compensation. After that, the amount of compensation would be negotiated in civil courts. According to internal calculations, the industry envisions a potential sum of €20 billion ($29 billion). The burden would ultimately fall on taxpayers.

Some experts expect that the nuclear industry could very well win its legal battle against the government's phaseout plan. "I have rarely seen such a poorly drafted law," says Wolfgang Renneberg, who used to be responsible for reactor safety at the Environment Ministry.

The FDP also has its misgivings. General Secretary Christian Lindner says that he is following the energy companies' legal intentions with concern. "We warned against this and would like to have taken precautions against this risk," says Lindner. FDP leader Rösler has said privately that he sympathizes with the industry's criticism. As economics minister, the issue is doubly unpleasant for Rösler.

It is also complicated by the fact that the energy companies are filing legal action against the fuel element tax, which is supported by the FDP. The first lawsuit is ready to be filed. RWE has just replaced the fuel elements in his Gundremmingen nuclear power plant. Under the law, this would make the company liable for a tax in the double-digit millions, payable within four weeks. And that, says an RWE spokesman, is something the company will not "accept without complaint."

Translated from the German by Christopher Sultan

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