Vattenfall CEO: Kruemmel Won't Go Online Before Mid-2011

Monday, January 24, 2011

BERLIN (Dow Jones)--German utility Vattenfall Europe AG has again delayed the planned restart of its nuclear power plant Kruemmel by some six months, Chief Executive Tuomo Hatakka told Dow Jones Newswires Tuesday.

On the sidelines of the Handelsblatt energy conference in Berlin Hatakka also indicated that the company's second northern German reactor--Brunsbuettel--might not be restarted at all if a review of the two power plants shows that a recently introduced tax on nuclear fuel in Germany makes the reactor loss-making.

Vattenfall Europe--a unit of Swedish state-controlled Vattenfall AB--and its partner E.ON AG (EOAN.XE) earlier this month started a review of the two jointly owned reactors aimed at improving the performance and profitability of the power plants.

Vattenfall's Hatakka also Tuesday said that his company will decline to comment if the joint review with E.ON could result in changes to the shareholder structure of the Kruemmel and Brunsbuettel nuclear plants.

He said, however, that Vattenfall will "certainly remain shareholder in both reactors."

In December, when the review was announced, a spokesman for E.ON had said that changes in the shareholder structure of the power plants "cannot be ruled out."

Vattenfall and E.ON both own 50% in the 1.3 gigawatt reactor Kruemmel. The 806-megawatt Brunsbuettel reactor is 66.7% owned by Vattenfall, while E.ON owns the remaining 33.3%. Vattenfall has operational control of both reactors.

"The nuclear plant Kruemmel won't go back online during the talks with E.ON AG," Hatakka said, adding that the company expects to conclude the review in around six months.

He added that Vattenfall and E.ON are "examining the profitability" of both power plants "very thoroughly" against the background of the new nuclear fuel tax.

"For Kruemmel we expect that the reactor can be operated profitably despite the nuclear tax," Hatakka said.

His comments come in response to the German government's decision last year to extend the operating lives of the country's 17 nuclear reactors. In return for longer operating lives, however, utilities have to pay a tax on nuclear fuel rods for the next six years, contribute to a fund that promotes energy efficiency and renewable energy sources and guarantee investment to improve the safety of the nuclear reactors.

Utilities like Vattenfall and E.ON have said that the nuclear tax--effective since January--will significantly hit earnings and cash flows, eating up much of the expected additional earnings from longer nuclear operating lives.

Vattenfall's Kruemmel and Brunsbuettel reactors have been offline for the best part of three years following glitches. Vattenfall had been fiercely criticized in public by politicians and sector competitors over its handling and communications of the outages. On several occasions regional politicians had questioned Vattenfall's capability to responsibly operate the power plants.

Posted in |