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Eon loses court battle for nuclear phase-out damages

A regional court in Hanover has ruled against a claim for damages by German utility Eon. It sued the government over its abrupt decision to phase out nuclear energy and to shut down two of Eon's old power plants.

The energy supplier demanded 382 million euros ($426 million) in damages from the German federal government as well as the German state governments of Lower Saxony and Bavaria for having to shut down two of its nuclear power plants in 2011.

The judge in the case justified the decision to throw out the lawsuit in saying that Eon could have immediately filed a suit to appeal the closures, but instead chose to let the opportunity pass. Eon had earlier claimed that such a process would still have resulted in the plants going offline long enough for similar losses to accrue.

Germany's coalition government, led by Chancellor Angela Merkel, decided to phase out nuclear power in the country months after a tsunami resulted in a nuclear disaster at the Fukushima Daiichi plant in Japan in March 2011.

Complying with the government's nuclear moratorium, Germany's biggest energy provider Eon had to shut down its power plants Isar 1 and Unterweser initially for three months. The government then passed a new law on nuclear energy, resulting in the two plants being powered down for good.

A slew of lawsuits

Eight of Germany's 17 functioning nuclear plants were shut down in the immediate aftermath of Fukushima, and the rest were slated to go offline by 2022 according to a government timeline.

Five years later, it's gradually becoming clear how much this hasty exit could cost. Feeling dispossessed by the move, major utilities have filed a raft of lawsuits claiming damage payments from the government amounting to around 20 billion euros ($22.3 billion).

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In a similar case, energy company EnBW had claimed damage payments worth some 261 million euros. But a court in Bonn dismissed the case in April this year, saying too that the utility company should have filed the lawsuit immediately after the government's announcement to phase out nuclear power.

Essen-based utility company RWE, on the other hand, had filed a case as early as April 2011. In early 2013, a court in the state of Hesse declared the shutdown of the nuclear power plants Biblis A and B to be illegal, as RWE had not been properly consulted before deciding on the issue. Germany's federal administrative court later upheld the ruling.

Constitutional challenges

But the energy companies take issue not only with the moratorium. They - RWE, Eon and Vattenfall - have also lodged numerous cases at the constitutional court in Karlsruhe against the government's entire policy mandating an accelerated exit from nuclear power.

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The firms claim they are being expropriated without compensation, and that - they say - is unconstitutional.

However, the government has not expropriated the companies' power plants. And its policy merely reduces the volume of electricity generated. It's therefore up to the judges of the constitutional court to now decide on the merits of this case.

If the court had ruled in favor of the companies, it would have likely set a precedent for other such lawsuits where the utilities are seeking damages. There are huge sums involved in these cases, with Eon alone claiming over 8 billion euros in damages. The corresponding figure for RWE, analysts estimate, stands at 6 billion euros, while that for Vattenfall is at least 4.7 billion euros. The fourth-largest utility in Germany, EnBW, has filed no constitutional challenges.

State responsible for disposal costs?

Lodging cases before the constitutional court is a pressure tactic, said Green Party politician Oliver Krischer in March. "It's to obtain concessions over the financing of nuclear waste disposal," he remarked, pointing to the nuclear commission the government had set up to advise it on how to allocate the costs of storage and disposal of nuclear waste as well as the decommissioning of the power stations.

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At the end of April, the commission presented its recommendations: The companies have to bear the costs of decommissioning the nuclear power plants. Furthermore, Eon, RWE, Vattenfall and EnBW are to pay 23.3 billion euros into a fund to manage the storage and disposal of nuclear waste.

In return, the state is to take on all the residual financial risks associated with radioactive waste management. A number of scientists and economists argue that the costs would be much higher than the 23.3 billion euros, and that the taxpayers would be on the hook for those cost overruns.

Germany's parliament is expected to vote on the recommendations after the summer break, and should it approve them, they would come into force at the end of the year.

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