A momentous court ruling calls for German utilities to be compensated for the early shutdown of nuclear plants.
The decision has been welcomed by the country's power giants, which were caught wrong-footed when Premier Angela Merkel announced the phase-out's accelerated time frame in 2011 following the Fukushima nuclear accident in Japan.
Yet little clarity emerged over the nature of the compensation, and how much it would do to alleviate utilities' balance sheets.
RWE, the country's second-largest power producer, stands to be one of the main beneficiaries: it will receive compensation for the Mulheim Karlich plant, which was only operational for a short time frame after significant delays.
E.ON, which was looking to receive damages worth several billion euros, is also likely to benefit, as are EnBW and Vattenfall, according to Fitch. But all will probably be disappointed by the scale of the compensation they are set to receive, the rating agency said.
“The ruling means utilities will be compensated for electricity output allowances allocated to each power plant in 2002 that cannot be used by the fixed shutdown dates for nuclear plants. They are also eligible for some reimbursements for investments made between December 2010 and March 2011.”
Until more details are disclosed on compensation schemes, their impact will be hard to gauge, Fitch said.
“There are many points yet to be decided between the utilities and the state. If any of the compensation is paid in cash, the impact will also depend on whether historical or current power prices are used.”
Given that that compensation needs to be enacted by a new law, it is unlikely to be implemented before 2018, the agency noted. In the meantime, it said companies would probably stick to previously announced measures to shore up their balance sheets, which have in recent years included multi-billion divestment plans.
“We also do not expect the ruling to affect the payments that companies will have to make into the state-run nuclear fund, which will cover the cost of storing nuclear waste,” Fitch concluded.