The German government, headed by Chancellor Angela Merkel, is facing a $10bn legal bill from the country’s largest utility.

E.ON is to seek $10bn in damages from the German government for the accelerated phase-out of nuclear energy, should the country’s constitutional court deem the policy shift an illegal act of expropriation, reports the FT.

Eon’s announcement came as the highest court asked dozens of institutions – including the BDI industry association – to give their views on constitutional challenges submitted by E.ON and rival RWE after Berlin last year closed eight of 17 nuclear reactors and brought forward a final phase-out from 2036 to 2022.

While legal experts believe a constitutional ruling will not come until late 2013 at the earliest, Eon’s demands throw a stark light on the risks of chancellor Angela Merkel’s “energy transformation” after last year’s nuclear disaster in Japan.

Merkel’s government stands over the constitutionality of the parliamentary vote to accelerate the nuclear phase-out, but E.ON and RWE are contesting that, and nuclear operators including Vattenfall are in line to win over $18bn in compensation for lost revenues and redundant investments, after what they claim was a hasty decision.

Ms Merkel’s ambition to replace nuclear power with renewable energy over the next decade has stirred fierce debate about the dangers of electricity supply shortfalls and rising prices.

Legal experts said the oral hearing to lay out the case on the nuclear phase-out in Germany’s highest court was unlikely before year’s end.

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