©Bloomberg

RWE’s nuclear power plant at Emsland in Germany

Shares in Germany’s big utility companies surged on Wednesday after a government commission said they should pay €23.3bn towards the cost of storing nuclear waste — removing an uncertainty that has weighed on the groups for months.

But despite the market’s positive reaction, RWE and Eon — the country’s two biggest utilities — immediately rejected the proposal, saying it “placed too much of a strain . . . on their economic capacity”.

They said that in dismissing the deal they were acting “out of a sense of responsibility to their employees, customers and investors”.

For the past six months, a 19-strong commission of experts has been trying to work out how to divide the costs of Germany’s multibillion-euro nuclear clean-up between the utility companies and the state.

Its aim was to find a compromise that did not impose too heavy a financial burden on Germany’s utilities — which are already suffering the effects of low electricity prices and a boom in wind and solar power — while achieving a fair deal for German taxpayers.

Shares in Eon and RWE, Germany’s two biggest utilities, have slid sharply in recent months, in part due to the uncertainty over the nuclear costs. After Wednesday’s announcement, however, they rose: Eon’s shares 3.95 per cent to €9.44 and RWE’s 7.5 per cent to €13.40.

“It’s a relief rally, in response to the partial lifting of the nuclear overhang,” said Deepa Venkateswaran, a utilities analyst at Bernstein Research. She said the €23.3bn figure was a “worst case scenario” which the power companies would probably not end up paying in full.

Germany decided to close its nuclear power stations after the 2011 Fukushima disaster in Japan. Initially, the plants’ operators were made liable for all clean-up costs and so far they have put aside about €38bn.

But the government has been eager to move those funds from the companies’ balance sheets, concerned that taxpayers could end up footing the bill if the utilities were to run into financial difficulties.

Under the proposals unveiled on Wednesday, the utilities’ nuclear provisions will be split. They would keep about €20bn to cover the cost of decommissioning their reactors and transfer sums earmarked for nuclear waste storage — about €17bn of the €38bn — into a state-controlled fund.

In addition, the commission proposed that the companies pay a “risk premium” of 35 per cent to cover any gap between their provisions and the actual costs of intermediate and final storage. That took the total amount to be transferred into the fund to €23.3bn. In exchange, the companies would no longer be liable for any future costs.

Some members of the commission had sought a risk premium of 100 per cent, while the companies themselves balked at paying such a premium at all.

Matthias Platzeck, one of the three heads of the commission, said it had to deal with a basic question: “Is it better and safer for the future to leave everything as it is now, that is, let the companies retain these provisions in the hope they will still be there in 50 years, or to secure them for the future?” He added that the commission was “firmly convinced” that the solution it had come up with would be “safer for the taxpayer”. 

Its proposals will now be sent to the German government and are likely to become law by early next year.