hurting gas and carbon today folks? coal?
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E.ON, RWE Shares Surge on Merkel's 12-Year Nuclear Lifeline
2010-09-06 08:05:28.355 GMT
By Brian Parkin and Nicholas Comfort
Sept. 6 (Bloomberg) -- E.ON AG and RWE AG soared in
Frankfurt trading after German Chancellor Angela Merkel's
government agreed to extend the lifespan of nuclear power plants
in exchange for payments to fund alternative energy projects.
E.ON, the country's biggest utility, had its biggest
intraday gain since May 27, advancing as much as 3.7 percent.
RWE, based in Essen, climbed as much as 2.8 percent. Before
today, the stocks had tumbled 21 percent since the start of the
year, putting them among the DAX Index's 3 biggest losers.
Coalition leaders yesterday in Berlin agreed to allow seven
reactors built before 1980 to run eight years longer than
planned and 10 newer plants to remain open an additional 14
years, said Klaus Breil, the ruling Free Democratic Party energy
spokesman, who took part in the talks. That would mean an
average extension of 12 years from the original 2022 shutdown
date.
"This is definitely a good result that makes good economic
sense. Power will remain affordable while renewable energy will
get a new kick-start," Breil said in an interview. "Nuclear
power is a bridge technology that we just can't do without."
Germany's opposition Social Democratic Party and the Green
Party, whose combined support in opinion polls exceeds that of
Merkel's coalition, vowed to annul any nuclear plant operating
extension if they win the 2013 federal elections, the
Frankfurter Allgemeine newspaper said, citing comments by SPD
leader Sigmar Gabriel and Claudia Roth, co-chairwoman of the
Greens.
Investment Fund
Merkel's government last week said the four nuclear power
utilities, E.ON, RWE, EnBW Energie Baden-Wuerttemberg AG and
Vattenfall AB would pay an atomic fuel tax from next year valued
at 2.3 billion euros ($2.97 billion) annually. The companies
will also pay 300 million euros in 2011 and 2012, and 200
million euros in subsequent years into an investment fund for
renewable energy projects, Breil said.
Combined profits at the companies may grow by about 6.4
billion euros for each year that the lifespan of the nuclear
plants is extended, the DIW economic institute said in a July 29
report. The government will reap a total of 30 billion euros
from the extension, Economy Minister Rainer Bruederle told
Deutschlandfunk radio today.
E.ON rose 66 cents, or 2.9 percent, to 23.59 euros as of
10:02 a.m. RWE climbed 1.31 euros, or 2.5 percent, to 54.54
euros, while Energie Baden-Wuerttemberg gained 1.36 euros, or
3.8 percent, to 37.36 euros.
Affordable Electricity
Merkel has championed a revival of nuclear power saying
that industry and consumers need affordable electricity until
renewable energy prices fall and grid and storage capacity for
the power source expands. Germans pay the third-highest rate for
power in the 27-state European Union after Denmark and Italy,
according to the Energy.EU website.
Merkel's government set a target for renewable energy
sources such as wind and solar power to contribute 30 percent of
power consumption in Germany by 2020 from about 14 percent last
year. Nuclear reactors supplied 23 percent of Germany's power in
2009, according to the Economy Ministry.
While the utilities pressured the coalition to make a quick
decision on nuclear power to unlock investment, Cabinet members
including Environment Minister Norbert Roettgen raised concerns
that plant extensions might trigger a legal and political
backlash.
For Related News and Information:
E.ON debt distributions: EOAN GY <EQUITY> DDIS <GO>
E.ON's historical market cap: EOAN GY <EQUITY> G X 69 <GO>
RWE's profit per employee: RWE GY <EQUITY> FA10 <GO>
--Editors: Angela Cullen, Jonas Bergman
To contact the reporters on this story:
Nicholas Comfort in Frankfurt at +49-69-92041-213 or
ncomfort1@bloomberg.net
Brian Parkin in Berlin at +49-30-70010-6229 or
bparkin@bloomberg.net.
To contact the editor responsible for this story:
James Hertling at +33-1-5365-5075 or jhertling@bloomberg.net.
