Vattenfall Group is seeking billions of euros in financial compensation from the German government over its accelerated exit from nuclear power generation, and is pursuing a double-tracked legal strategy, the company's head of energy production said in an interview with The Wall Street Journal Deutschland.
Vattenfall Group is seeking billions of euros in financial compensation
from the German government over its accelerated exit from nuclear power
generation, and is pursuing a double-tracked legal strategy, the company's head
of energy production said in an interview with The Wall Street Journal
Deutschland.
The Swedish state-controlled energy company hopes to reach an out-of-court
settlement with the government over the matter, said Tuomo Hatakka, who also is
Vattenfall's top executive in
Germany
.
At the same time, however, Vattenfall is preparing to file a complaint with a
Washington-based international arbitration court, and doesn't rule out
simultaneously challenging the government in
Germany
's
constitutional court.
The German Economics Ministry didn't return calls seeking comment.
While Vattenfall has previously said it intends to call upon the services of
the arbitration court, Hatakka's comments are the first indication that the
company could take the German government to the country's highest law court.
"We accept and respect the accelerated nuclear exit. But we expect to
receive a fair financial compensation for the damages we have incurred,"
he said.
The legal dispute between
Germany
and
its dominant utilities--which also include E.ON AG (EOAN.XE), RWE AG (RWE.XE)
and EnBW Energie Baden-Wuerttemberg AG (EBK.XE)--is related to the government's
nuclear policy reversal last year that followed the accidents in
Japan
's
Fukushima Daiichi reactors.
However, some legal experts have said the nuclear exit massively injures the
proprietary rights of the power plant operators and could be considered to
equate to a dispossession.
The nuclear retreat led to the immediate shut-down of eight out of 17 reactors--two
of which are majority-owned by Vattenfall--and triggered billions of euros in
extra charges for the utilities, which cut investment and pledged to conserve
cash in response.
Additionally, the utilities suffered lost earnings from the reactors they had
to shut down, which is expected to weigh on their results because they
traditionally forward sell their electricity production several years ahead of
physical delivery to customers.
Vattenfall's Hatakka said the legal complaint with the international arbitration
court, which would be based on the Energy Charter Treaty--an international
agreement which provides a multilateral framework for energy trade, transit and
investment--has already been initiated internally. However, the complaint
hasn't yet been submitted to the court, he added.
"Simultaneously we're examining a possible constitutional complaint"
in
Germany
,
Hatakka said.
He declined to detail the compensation that Vattenfall seeks from the
government. However, he added that retrofitting and modernizing its two
reactors Brunsbuettel and Kruemmel alone, cost the company between EUR600
million and EUR700 million over the past few years.
Analysts have previously said that the damages claims from Germany's reactor
operators--which will likely also include costs related to impairments on
nuclear assets and lost profits from the already shuttered reactors--could
total or even exceed EUR15 billion.
E.ON last November was the first of
Germany
's
nuclear reactor operators to file a constitutional complaint in what is
expected to become a series of legal battles that could make the planned
nuclear exit a costly undertaking for taxpayers.
The nuclear exit decision threatens to become bogged down with legal disputes,
and several of the nuclear reactor operators have previously sued the
government over the introduction of a tax on nuclear fuel, which the companies
say also violates the constitution.
In a preliminary decision on the nuclear tax, two courts have previously
expressed doubts that the levy is constitutional. However, a third court last
week backed the government, saying that it doesn't share the doubt expressed by
the other two courts.
Vattenfall's Hatakka also said that the accelerated nuclear exit increases
pressure to cut cost, adding that the company may seek further savings down the
line.
"We're still examining if the originally planned cost reductions of EUR650
million will be enough," Hatakka said.
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