E.ON, one of Germany's and Europe's biggest electricity producers, has committed itself to a renewable energy future. But the company is having trouble walking away from its legacy nuclear power plants.
Germany's biggest utility E.ON has dropped its plans to spin the country's nuclear power plants off into a separate corporation, caving in to political pressure to retain liability for billions of euros of decommissioning costs when the stations go offline.
The group had planned to restructure by transferring its nuclear power plants, energy trading, and oil and gas activities into a separate unit called Uniper.
Now the Duesseldorf-based company is left with the task of coming up with 16.6 billion euros ($18.7 billion) in provisions, needed to fund the decommissioning of its nuclear plants. The German government decided in 2011 to phase out nuclear power entirely by 2022.
These provisions could limit critical investments the group needs to make in its principal future businesses, which include renewables, networks and services - hailed by E.ON as pillars of the new energy world.
E.ON Chief Johannes Teyssen warned the company would post a net loss for 2015, which would be a "mid-single digit billion euro" figure.
He pointed the finger at impairment charges of as much as 9 billion euros, which E.ON will book in the third quarter to reflect falling commodity prices and unfavorable regulation.
The news sent E.ON shares tumbling over 5 percent in early morning trading to a 20-year low. Its German rival, Essen-based utility RWE, also saw its stock plunge over 3 percent.
Political aftershocks of Fukushima
The German government last week proposed a liability law preventing utilities from evading responsibility for the nuclear shutdowns via corporate restructuring.
The move was a response to the prospect of utilities, like E.ON, spinning off nuclear assets to dodge the costs of nearly 40 billion euros of provisions needed to decommission the country's nuclear power plants.
The last of these will be shut over the next seven years - a decision agreed upon by German policymakers in reaction to the Fukushima disaster from March 2011.
E.ON operates three nuclear plants in Germany and has minority stakes in several others. Its nuclear power assets in the country account for 8 percent of its generation portfolio.
el/nz (Reuters, dpa)