March 14, 2012 / 9:53 AM / in 6 years

E.ON clocks up energy trade loss of 1.84 bln euros

March 14 (Reuters) - Germany’s E.ON, the world’s largest utility by sales, posted 1.84 billion euros ($241.21 billion) of losses in its energy trading unit, as it was caught out by price fluctuations linked to Germany’s decision to phase out nuclear power.

E.ON’s annual report on Wednesday showed adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) at trading unit E.ON Energy Trading fell to a negative 631 million euros in 2011, down from a profit of 1.205 billion in 2011.

The utility said the main reason for the loss was the high transfer prices that had been locked in from 2008 onwards for the power it bought from its own power generation business in 2011.

E.ON was subsequently forced to shut two big reactors in 2011 as a result of Germany’s decision to exit nuclear power following Japan’s Fukushima disaster, so its anticipated nuclear power supply had to be replaced via purchases, hitting profits.

The utility also suffered from the lower electricity prices across the board that are hurting its peers too.

European power prices fell in the course of 2011 after brief spikes in March and April, reflecting fears of tightness after the German government’s nuclear closure decisions.

But supply turned out to be adequate around Europe and prices fell as the weak economic environment in the euro zone depressed demand, while growing renewable energy output competed with established thermal and nuclear power plants.

This affected all of Germany’s big utility players, whose focus had traditionally been on large slices of stable nuclear power production within their electricity mix.

E.ON said proprietary energy trading -- trading with its own money -- at its trading unit, which also handles commodities such as coal, carbon and gas, rose to 44 million euros in 2011 after a 105 million euro loss in 2010. ($1 = 0.7628 euros) (Reporting by Vera Eckert; Editing by Helen Massy-Beresford)

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