Power utility RWE AG (RWE.XE) expects a new tax on nuclear fuel rods that the German government wants to impose from 2011 will reduce earnings before interest, taxes, depreciation and amortization could by around EUR700 million annually in coming years, daily newspaper the Financial Times Deutschland reports in its Thursday edition.

Citing Chief Financial Officer Rolf Pohlig, the newspaper says RWE's recurrent after tax profit could be cut by EUR500 million a year, which is less than anticipated about a month ago when the tax burden was expected to be even larger.

The government's plans to impose taxes on nuclear power plant operators are part of a deal to prolong the operating lives of Germany 's nuclear reactors agreed last week. The duty on nuclear fuel rods is expected to cost the four nuclear operators RWE, E.ON AG (EOAN.XE), EnBW Energie Baden-Wuerttemberg AG (EBK.XE) and Vattenfall Europe AG (VTT-XE) EUR2.3 billion in tax payments per year. However, the levyis partially tax deductible.

The levy was previously expected to total EUR2.3 billion per year after deducting taxes. At that time RWE had said that the tax would reduce Ebitda by around EUR1 billion, or 14%. The impact on annual recurrent after tax profit would be around EUR650 million, or about 18%, RWE in August.

RWE and the other nuclear operators have said they would review their investment plans, may cut dividend payments, look for further cost savings and possibly asset sales to retain their financial health and credit ratings.

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