Merkel Wants Separate Payments For Nuclear Extension

Sunday, August 29, 2010

LINGEN, Germany - (Dow Jones)- German Chancellor Angela Merkel Thursday said she is in favor of the country's nuclear power plant operators making further financial contributions in return for longer reactor operating lives, which would come on top of a tax on nuclear fuel her government has proposed to help reduce the public budget deficit.

"We're eyeing the levy to achieve our goal to consolidate the [federal] budget," Merkel told reporters.

"On top of that we have to discuss how the energy utilities will contribute to [the expansion of] renewable energies," she said.

Merkel made the comments after meeting the chief executives of the country's largest utilities, E.ON AG and RWE AG, at RWE's nuclear reactor Emsland in Lingen, western Germany.

Merkel said the utilities' contributions to promote renewable energies wouldn't necessarily result in a further levy like the tax on nuclear fuel rods.

Several politicians have previously proposed that reactor operators should guarantee investment into renewable energies.

Germany's nuclear reactor operators -- E.ON, RWE, EnBW Energie Baden-Wuerttemberg AG and Vattenfall Europe AG -- have warned that the government's plan to tax the fuel used in nuclear power plants could make reactors unprofitable and hasten the country's exit from atomic energy generation.

They have also said the levy would hit their future earnings and might require them to reduce investment plans and sell assets to retain their credit ratings.

Merkel's center-right coalition has said it will raise EUR2.3 billion annually from the fuel-rod tax from 2011 as part of its EUR80 billion austerity measures for the coming years.

The nuclear tax plan is tied to an ongoing debate about extending the operating lives of nuclear reactors, a move favored by utilities.

Germany is in the process of gradually phasing out all of its remaining 17 nuclear reactors by around 2022, but the government has said it plans to extend their operating lives to help achieve its ambitious climate-protection targets.

The government had originally planned to extend the operating lives of nuclear power plants under the condition that they're safe to operate and utilities give up a certain part of the profits they would generate by running the reactors longer. These funds would have been used to help fund the expansion of renewable energy sources, according to the coalition agreement.

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