German Economy Minister attacks power prices plan: report

BERLIN Sun Feb 3, 2013 2:01pm GMT

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BERLIN (Reuters) - German Economy Minister Philipp Roesler has condemned proposals by the environment minister to limit electricity price rises for consumers as "illusory solutions" that were doomed to failure, Der Spiegel weekly reported on Sunday.

The withering attack is the latest signal that the plans will fail due to resistance from within Chancellor Angela Merkel's coalition and from opposition parties which could block the reforms in the Bundesrat upper house.

In a bid to curb increases in household power bills before September's election, Environment Minister Peter Altmaier said last week he wanted to cap rises in subsidies to renewable power producers and suspend feed-in tariffs to new installations.

He also wants owners of existing renewable installations to contribute to an "energy solidarity tax" and to end exemptions for some energy intensive firms from a surcharge for renewables which is imposed on households.

However, Der Spiegel quoted an internal report from the Economy Ministry, run by Roesler, which delivered a damning verdict on the plans from Altmaier, a member of Merkel's conservatives. Roesler is head of the Free Democrats (FDP), who share power with Merkel's conservative block.

Instead of "fundamentally addressing the mistaken incentives of the Renewable Energy Law", Altmaier had turned to "solutions which are an illusion", Der Spiegel quoted the report as saying.

The "energy solidarity tax" contained "extreme legal risks" and other ideas would meet "significant political resistance" from Germany's 16 federal states who are represented in the Bundesrat. In short, said the report, the ideas were nothing more than electioneering.

German energy policy, including Merkel's ambitious switch to renewable power from nuclear, has been plagued by rows between the economy and environment ministries which has delayed policy implementation.

However, Altmaier's plans are being watched closely by power and carbon traders. On Friday even a comment by Merkel saying she supported her minister's plans pushed up prices.

In a further sign of the obstacles Altmaier faces, opposition parties have also attacked the plans.

With an election just eight months away, Merkel is keen to show voters she is trying to stem rises in household power bills which have soared due mainly to a big rise in the surcharge imposed to fund her switch to renewables.

In Bild am Sonntag newspaper, however, Altmaier warned that power prices would rise further if there was not a reduction in the costs of the "green revolution" - in other words generous subsidies which have boosted Germany's renewables sector.

"Without safeguards for power prices, there is the threat of further rises of up to 10 percent," Altmaier said.

(Reporting by Madeline Chambers; Editing by Erica Billingham)

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