🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

German utilities face 6 billion euro windfall after nuclear tax ruling

Published 06/07/2017, 05:33 AM
Updated 06/07/2017, 05:40 AM
© Reuters.  German utilities face 6 billion euro windfall after nuclear tax ruling

By Christoph Steitz

FRANKFURT (Reuters) - Germany's top court declared the country's nuclear fuel tax illegal on Wednesday, raising the prospect of a 6 billion euro ($6.8 billion) refund to utilities at a time of strained balance sheets.

The verdict marks a second win for utilities over Germany's nuclear policy after a court ruled in December that a push to shut down all of Germany's nuclear plants violated their rights.

E.ON, RWE and EnBW have been hit hard by Chancellor Angela Merkel's decision to exit nuclear power by 2022, a move prompted by the disaster at Fukushima, Japan, in March 2011.

The nuclear fuel tax has further weighed on utilities. Imposed between 2011 and 2016, it amounted to payments of 6.285 billion euros from nuclear plant operators.

On Wednesday, the Karlsruhe-based Constitutional Court said the tax was "formally unconstitutional and void", adding the government did not have the legal competence to claim it.

"Now E.ON and RWE can expect a well-timed windfall that comes as a help during their restructuring," one local trader said. "It's a positive surprise and not fully reflected in analyst estimates."

E.ON said the ruling meant it would be refunded about 2.85 billion euros plus 450 million euros in interest, adding this would boost its net profit and lower its net debt. It confirmed its outlook for 2017.

E.ON shares rose as much as 5.6 percent, hitting a 10-month high. RWE shares climbed as much as 7 percent to their highest level in almost two years. Thinly-traded EnBW was up 2.1 percent.

In the aftermath of Fukushima, E.ON and RWE have both undergone major corporate overhauls, separating their conventional power plant businesses from operations such as renewables and networks.

The fuel tax required nuclear plant operators to pay 145 euros per gram of nuclear fuel each time they exchanged a fuel rod, which usually happens about twice a year.

RWE and EnBW have paid 1.7 billion and 1.44 billion euros, respectively.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.