HomeWorld RegionsEuropeGerman utilities score victory over Merkel government

German utilities score victory over Merkel government

Germany’s top power utilities have recorded a major victory over the government, after the country’s highest court ruled a law imposing a tax on nuclear fuel was unconstitutional.

RWE, E.ON and EnBW who have suffered greatly from the Merkel government’s decision to phase out nuclear power and facilitate renewables under the Energiewende policy, can now claim a tax refund.

The tax, which was introduced in December 2010, required nuclear operators to pay €145 ($163) per gramme of fuel deployed in their reactors. Between 2011 and 2016 it yielded €6.3bn for the German budget, But the German Constitutional Court in Karlsruhe said the government did not have the legislative powers to impose the tax, and declared it retroactively null and void.

The tax had been implemented prior to Fukushima as a compromise between government and utilities, allowing the latter to extend the service life of their reactors. However the government opted for complete phase out following the 2011 incident in Japan, but continued to impose the tax.

In 2016, the government ordered the utilities to pay €23.6bn into a new state fund that will finance the future storage of nuclear waste, €6.2bn more than they had provisioned for.

The tax refund could run into billions, according to the Financial Times.

In a statement sent to Power Engineering International, RWE said they expect the payment to be refunded. “Today, the German Constitutional Court informed RWE in writing that the nuclear fuel tax levied until 31 December 2016 was not compliant with the provisions of German constitutional law and is retrospectively void. RWE had made approximately EUR 1.7 billion in nuclear fuel tax payments since 2011. The tax had a limited term from the beginning and lapsed on 31 December 2016.”

“RWE will analyse the reasons for the decision. The company had already stated in its annual report that any refunds would be recorded in the non-operating result. Therefore, adjusted EBITDA and adjusted net income will not be affected. No decision has been made on how these
funds will be used.”

Meanwhile EnBW also released a statement along similar lines, stating, “EnBW has always emphasized that, according to its conviction, the fuel tax is not constitutionally compliant. With today’s decision of the Federal Constitutional Court, we are confirmed in this legal opinion. We will now review the decision and evaluate its impact in detail.”

“We assume that the decision of the Federal Constitutional Court will result in a total tax refund of around EUR 1.44bn plus interest from EnBW from all pending procedures for tax payments between 2011 and 2016.”

Finally, on Wednesday afternoon, E.ON issued a statement, describing a requirement for a much larger tax refund than that proposed by their peers.

“With today’s verdict, the Federal Constitutional Court has clarified that the levying of the nuclear fuel tax is incompatible with the Basic Law. E.ON is therefore assuming that the state’s unlawfully levied tax amounts of around € 2.85 billion plus interest of € 450 million will be reimbursed.”
“The payment of nuclear fuel tax had significantly impacted E.ON’s results since 2011. The associated income has a positive effect on E.ON SE’s consolidated net profit, cash flow and economic net debt. Since this is an extraordinary, non-operative transaction, the control figures for adjusted EBIT and adjusted Group net income remain unaffected. E.ON thus confirms its forecast for the 2017 financial year.”
“E.ON will use the backflow of non-constitutional taxes to strengthen the Company’s balance sheet. Individual measures are decided upon at a later date after careful consideration.à‚  On the basis of a strengthened balance sheet, E.ON will implement the dismantling of the nuclear power plants which have already been decommissioned and still to be decommissioned as safely and quickly as possible. “