E.ON bows to political pressure and keeps nuclear plants
The group also it expected to record impairment charges in the 鈥渉igher single-digit billion euro range鈥� because of low wholesale power prices. E.ON鈥檚 shares plunged more than four percent in reaction to the announcement.
The group鈥檚 CEO, Johannes Teyssen, explained in a newsletter government plans to make utilities permanently liable for the costs of nuclear decommissioning created unacceptable risks for the company鈥檚 previous plans to transfer nuclear activities to spin-off Uniper.
The government plans to close a legal loophole to prevent utilities from evading the multi-billion euro costs for the country's nuclear phase-out. Under current laws, the utilities are only liable for spun off companies for five years. According to the new draft law, the companies would be liable for as long as it takes, even if they spin off their nuclear activities. Energy minister Sigmar Gabriel has called the proposal the 鈥減arents are liable for their children law鈥�.
Teyssen reiterated that he deemed a change to the liability limit to be unconstitutional, but he added his company didn鈥檛 have the time to wait for the outcome of a legal dispute which might take years.
E.ON said it still operated three active nuclear power plants in Germany and had minority shares in three others. The company said as a consequence of this change in strategy, about 2,300 employees will not be transferred to Uniper as previously planned. The nuclear activities and the employees will instead be transferred into a separate unit named 鈥淧reussenElektra鈥�, which will be based in Hannover.
Apart from the nuclear activities, the 鈥渘ew鈥� E.ON will also consist of networks and renewables, 聽while Uniper will inherit the remaining power plants, energy trading and the group鈥檚 oil and gas activities.
Germany鈥檚 Energiewende - a dual move to phase-out nuclear power and to create a low-carbon economy through renewable energy - has left the four major utilities that have dominated the market for decades struggling. E.ON, RWE, EnBW and Vattenfall have started to adjust their business models - yet despite some drastic steps, their future role in Germany's greener, fast-changing energy markets is far from clear.
Utilities are liable to pay for most of the costs of ridding Germany of its nuclear heritage. But the companies鈥� economic troubles have stirred fears they might not be able to do so. By the end of 2014, the utilities had set aside for this task. But critics doubt whether this money will be available when needed and also question whether it will be enough, given huge uncertainties about the costs of decommissioning nuclear plants and storing radioactive waste. This is why the Ministry for Economic Affairs and Energy is currently stress-testing the reserves made by the big four utilities E.ON, RWE, EnBW and Vattenfall.
Read the Factsheet 鈥淪ecuring utility payments for the nuclear clean-up鈥� here.
Find the Factsheet about 鈥淣uclear clean-up costs鈥� here.
Read the Factsheet 鈥淟egal disputes over the nuclear phase-out鈥� here.
Find the Factsheet 鈥淲hat to do with the nuclear waste 鈥� the storage 辩耻别蝉迟颈辞苍鈥� here.
Read a dossier on the utilities struggle to cope with the Energiewende here.
