Merkel confident on nuclear plan despite opposition-WRAPUP 1

Trade the News

Monday September 06, 2010 02:25:13 PM GMT

* Merkel confident plan does not need backing of upper house

* Opposition parties plan legal challenge

* Older plants to be extended by 8 years, newer by 14

* Shares in utilities E.ON, RWE, EnBW rise

By Peter Dinkloh and Vera Eckert

FRANKFURT/MUNICH, Sept 6 (Reuters) - German Chancellor Angela Merkel said on Monday she was confident that a law to extend the lives of nuclear power reactors could be passed without backing from the upper house of parliament, setting up a clash with opposition parties.

Her centre-right ruling coalition ended months of division late on Sunday by agreeing that the country's 17 nuclear power plants should operate longer than planned, giving each reactor an average extension of about 12 years. [ID:nLDE6840EZ]

The deal comes ahead of a comprehensive energy plan due from the government this month and addresses concerns in the coalition and industry over the fate of the plants, the last of which was due to shut by 2021.

"I'm in good spirits that it would stand up against potential lawsuits," Merkel told a news conference in Berlin. "We believe we can get this into law without (Bundesrat upper house) approval."

Shares in utilities E.ON, RWE and EnBW rose on Monday. Sweden's unlisted Vattenfall is the fourth big utility affected.

The opposition Social Democrats and the Greens parties immediately said they planned a legal challenge to Merkel's attempts to sidestep the upper house which Merkel's coalition controlled until a regional election defeat in May.

The German public strongly opposes building new nuclear power plants and there is a major protest planned for Sept. 18 against the plan to extend their operating lifespan.

The SPD and the Greens have vowed to scrap any nuclear extension passed if they return to power in the next vote set for 2013. They are currently ahead of the centre-right in opinion polls.

PROFITABLE NUCLEAR

Nuclear accounted for about 23 percent of the power generated in Germany in 2009, unchanged from 2008, according to information from energy industry association BDEW.

Nuclear power stations are the most profitable large-scale plants after building costs are paid off, as the fuel is cheaper than fossil fuels and utilities do not need carbon certificates.

More than half of Germans surveyed consistently oppose extending the reactors' lifespans, opinion polls show.

They oppose extending the lifespans of existing nuclear plants due to memories of the 1986 Chernobyl disaster and over concerns over nuclear security and waste storage.

To sweeten the deal, the government said it will raise some 30 billion euros ($38.62 billion) from utilities in the years ahead that will be used to cut budget deficits and to expand renewable energy.

Others were less certain, citing the power of the nuclear lobby.

"The nuclear lobby has successfully put through its bold demands," Dietmar Schuetz, president of German renewable energy agency BEE, said in a statement. "This means that the government's energy concept becomes a farce."

Volker Wasgindt, spokesman for SMA Solar, Germany's biggest solar company by market value, said: "In our view, the extension of lifespans for nuclear plants puts a damper on the expansion of renewable energy."

In August E.ON had warned a nuclear fuel tax to accompany the extension plans would cut its adjusted earnings before interest and taxes by up to 1.5 billion euros ($2 billion) a year.

RWE had said it might invest less in power stations and grids because of the possible tax and had to review its medium-term profit expectations.

RWE said it would have to study the details of the new plan before it could comment on the consequences.

"Our first reaction is positive because the extension is longer than we expected," said Merck Finck analyst Theo Kitz.

DZ bank analyst Mario Kristl said the government is also siphoning off fewer profits from the utilities than expected.

European Union energy commissioner Guenther Oettinger welcomed Germany's move, saying plans to grant nuclear plants longer life spans tied in with wider energy plans for the bloc. [ID:nLDE6850PB]

Legislation to phase out the plants took effect in 2002, passed by the SPD and the Greens under ex-Chancellor Gerhard Schroeder.

(Writing by Annika Breidthardt; Additional reporting by Christoph Steitz in Frankfurt, Anneli Palmen in Duesseldorf, Erik Kirschbaum in Berlin; Editing by Jason Neely)

(c) Copyright Thomson Reuters 2010. Click For Restrictions. http://about.reuters.com/fulllegal.asp