June 1, 2016 / 8:46 AM / 3 years ago

Germany agrees to plug nuclear liability loophole

BERLIN (Reuters) - The German government passed a regulation on Wednesday that aims to ensure utility companies remain liable for the costs of shutting down nuclear power plants even if they split up.

A radiation sign is attached to a barrel containing radioactive water during the visit of German Environment Minister Barbara Hendricks (not pictured) to the Asse nuclear waste disposal centre in a unused mine near the German village of Remlingen March 4, 2014. REUTERS/Jochen Luebke/Pool

Germany decided to end nuclear power by 2022 following Japan’s Fukushima disaster five years ago.

Chancellor Angela Merkel’s cabinet said it would adopt recommendations made by a commission requiring Germany’s utilities to pay 23.3 billion euros (18 billion pound) into a state fund to cover the costs of storing nuclear waste.

This included a provision that will make all parts of a company liable for the costs of Germany’s nuclear shut down even if the utility has split up, the Economy Ministry said.

“Any spin-off after this date will be covered by the intended regulation,” the ministry said in a statement.

Shareholders will vote on plans to spin off the utility’s power plant and energy trading unit At E.ON’s annual general meeting on June 8.

Germany’s No.2 utility RWE also plans to hive off its renewables, grids and retail units into a separate entity and sell a 10 percent stake in an initial public offering.

Last year, the German cabinet approved a draft law that ensures power firms will remain liable for the shutdown and decommissioning costs for as long as it takes, even if they spin off subsidiaries that own the nuclear entities.

But there was some uncertainty over whether this would still apply if the nuclear assets remain with the parent company.

The new legislation seeks to close that loophole and ensure that taxpayers won’t be forced to foot the bill for the costs of dismantling and storing nuclear waste if a firm goes bankrupt.

Shares in E.ON and RWE were trading down 2.9 percent and 3.1 percent by 0922 GMT, compared to a 1 percent weaker European utilities sector.

A 19-member commission recommended in late April that Germany’s “big four” power firms - E.ON, RWE, EnBW and Vattenfall - pay a total 23.3 billion euros ($26 billion) to remove unwanted long-term liability for the storage of nuclear waste.

The responsibility for dismantling and storing nuclear waste in the interim will remain with the utility companies.

Reporting by Caroline Copley and Markus Wacket; Editing by Paul Carrel/Ruth Pitchford

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