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UPDATE 2-E.ON offers to work with German government on nuclear shutdown
August 12, 2015 / 11:04 AM / 2 years ago

UPDATE 2-E.ON offers to work with German government on nuclear shutdown

* Germany plans exit from nuclear power

* E.ON proposes model of “shared responsibility”

* H1 profit falls 13 pct, dragged lower by plants (Recasts, adds fresh CEO comment, details on nuclear)

By Christoph Steitz

FRANKFURT, Aug 12 (Reuters) - German utility E.ON said it was prepared to work with the government on shutting down the country’s nuclear energy industry, seeking to safeguard its plan to split itself into two separate companies.

Germany plans to close its last nuclear plant by 2022 and the government is anxious to ensure that utility companies pay their share of the costs.

The government wants to close a loophole that could allow utilities to avoid liability for tens of billions of euros in nuclear provisions by spinning off units. Under current corporate laws, former parent companies are liable for such businesses for only five years.

That move threatens to complicate a plan by E.ON to spin off its power plants, oil and gas operations as well as energy trading next year. The unit, Uniper, would assume 16.6 billion euros ($18.5 billion) in nuclear provisions

E.ON CEO Johannes Teyssen suggested a willingness to compromise.

“I believe that the idea of creating a shared responsibility has a lot of merit,” Teyssen told reporters on Wednesday, adding that the company was “definitely open” to finding a joint solution.

Speaking on a call to discuss first-half results that included a 13-percent drop in core earnings driven by conventional power generation, Teyssen did not elaborate on what a potential solution could look like.

Germany’s economy ministry has said it is preparing a law to “increase the legal certainty (for nuclear liabilities) during company reorganisations”.

The government is also forming a commission to make recommendations by the end of November for how to safeguard provisions in the long term.

“We believe that the government should wait for the results presented by its commission and not draw conclusions without a clear picture of the situation,” Teyssen said.

E.ON’s planned split is a response to dramatic changes in the industry, where many gas and coal-fired plants are piling up losses in light of a massive expansion in wind and solar power capacity across Europe.

The change led to a 29-percent drop in first-half profits at E.ON’s unit in charge of conventional power generation and a drop in overall earnings before interest, tax, depreciation and amortisation (EBITDA) to 4.27 billion euros.

The decline was in line with expectations.

The jury is still out about whether E.ON’s spin-off plan will work, with analysts rating the stock an average “hold”. ($1 = 0.8986 euros) (Editing by Maria Sheahan and Keith Weir)

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