RWE and Vattenfall to receive over $1bn in compensation from German government

A draft law has set out proposals for compensation for utilities RWE and Vattenfall.

According to Reuters the compensation is currently figured to be around $1.21bn, as a result of the German government’s decision to phase out nuclear power completely, despite investments having made by the companies in good faith prior to the ruling.
Court hammer
Compensation payments for utilities will not exceed a low single-digit billion euros amount and will more likely be in the high three-digit-million euros range, according to a draft proposal being reviewed by Germany’s Federal Environment Ministry.

The precise compensation sum depends on electricity prices, and will be finalised in 2023, the proposal showed.

It was further confirmed by the ministry led by Svenja Schulze (SPD) that the last nuclear power plants would cease operating in Germany in 2022.

The news comes after the Federal Constitutional Court ruled that RWE and Vattenfall both had the right to financial compensation for losses incurred as a consequence of the abrupt U-turn of the Christian Democratic Union (CDU), Christian Social Union (CSU) and Free Democratic Party (FDP) coalition government on nuclear power in 2011.

The Karlsruhe-based court argued that the nuclear power plant operators had committed to high sunk cost (an asset which cannot be easily used for other purposes, note) in good faith on the basis of legal guarantees for future production levels.

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