German utilities defend nuclear provisions after report

Reuters News
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Posted: Sep 14, 2015 2:40 PM

FRANKFURT/BERLIN (Reuters) - German utilities rebutted a media report that nuclear operators could be as much as 30 billion euros ($34 billion) short in their provisioning for waste disposal.

E.ON questioned the core assumptions in the Spiegel Online report which sent its shares to a 22-year low and those of rival RWE to an all-time low on Tuesday.

RWE said it had made "right and appropriate" provisions while EnBW said its were kept topped up.

Spiegel Online reported provisional findings of a law firm appointed by the Economy Ministry which said four German energy companies were as much as 30 billion euros adrift of the money they must set aside as Germany exits nuclear power by 2022.

Germany's established utilities are struggling to adapt their business models to changes including the rise of renewable energy.

E.ON, RWE, EnBW and Vattenfall [VATN.UL] are due to switch off their nuclear plants by a 2022 deadline set by Chancellor Angela Merkel's government after the Fukushima disaster in Japan in 2011.

Law firm Warth & Klein Grant Thornton, which has been commissioned to prepare an assessment, declined comment.

An E.ON spokesman said while there was no official result, only a draft, it seemed to be based on a scenario expecting negative interest on the sums to be held, which "therefore does not arrive at a realistic sum for the provisions".

E.ON is working on the basis of earning interest of 1 percent on the funds held, he said.

The Spiegel report said that according to the auditors, the 39 billion euros set aside by the energy companies for dismantling the nuclear plants was sufficient, but they were short of funds for the final disposal of nuclear waste.

Equity analysts Bernstein in a market note said: "We have serious doubts on the validity of this assertion (the Spiegel report)," adding it was based on an extreme scenario.

E.ON shares were down 6.8 percent to 8.00 euros and RWE shares off 7.2 percent at 10.95 euros versus a flat German blue-chip DAX as of 0810 GMT.

(Reporting by Tom Kaeckenhoff, Christoph Steitz and Gernot Heller; writing by Paul Carrel, Vera Eckert; editing by Georgina Prodhan and Jason Neely)