Court backs German utilities' compensation claim

06 December 2016

Germany's Federal Constitutional Court today ruled that, although the country's 2011 phase-out legislation is essentially in compliance with the constitution, power utilities are entitled to "reasonable" compensation for the early shut down of their nuclear power reactors.

Germany's reaction to the Fukushima accident in 2011 was extreme, with Chancellor Angela Merkel making two decisions: firstly to order a shutdown of eight units that started operation in or before 1980 for a three-month moratorium period; and subsequently that those units may not be allowed to restart. Without consultation or reference to independent regulatory advice on the safety of the plants, the orders were executed by the German states which are home to the reactors.

Collectively the utilities lost 8336 MWe of nuclear generating capacity, closing Biblis A and B, Neckarwestheim 1, Brunsbuttel, Isar 1, Unterweser, and Phillipsburg 1. Despite only starting operation in 1984, Krummel was not brought back from long-term shutdown.

Three of the four energy company operating those plants - EOn, RWE and Vattenfall - launched legal actions seeking compensation for the early shut down of their reactors. They claim the change to the law constitutes expropriation. EnBW, which is 45% owned by the Green-governed state of Baden-Wurttemburg, did not contest the shutdown.

In its judgement today, the Constitutional Court said the phase-out legislation itself is largely within Germany's constitution. However, it said it does "violate the constitutionally guaranteed right to property to the extent that the introduction of fixed dates by which nuclear power plants in Germany must be shut down does not ensure that the electricity output allowances allocated to each power plant by law in 2002 will be used up within the corporations concerned before the fixed shut down dates." The court added German legislation "does not provide for any settlement with regard to investments made in legitimate expectation of the additional electricity output allowances granted in 2010 and that were devalued as a result of the striking out of these allowances" under the country's nuclear phase-out legislation.

The court said the legislator should have at least taken these losses into consideration for its decision at the time. It therefore ruled the power companies should receive at least partial compensation for the early nuclear phase-out.

EOn has said it lost €8.0 billion ($8.6 billion) as a result of the early shut down of its reactors, whilst Vattenfall claims to have lost €4.7 billion. Analysts have estimated RWE's losses at €6.0 billion.

According to the ruling, the legislator must draw up new provisions in the legislation governing this compensation by the end of June 2018. The court did not state how much money the energy companies are entitled to but its ruling creates the basis for out-of-court settlements or for further court cases.

The three utilities issued statements welcoming the court's decision and saying they are prepared to enter constructive talks with the German government on the implementation of the ruling. They also commented that the amount of the claims they will seek cannot be quantified until the court's decision has been analyzed in more detail.

EOn said the ruling "acknowledges above all the importance of trust when it comes to investments made on the basis of political decision."

RWE Power CEO Matthias Hartung said, "With today's decision by the highest German court, we have gained certainty for our company and its owners regarding a legal issue that is of fundamental importance for us."

Researched and written
by World Nuclear News