nuclear-news

German utility RWE splits, in order to deal with costs of nuclear station closures

Germany’s RWE splits to better absorb cost of nuclear plant closures , Reuters, 1 Dec 15 

* Nuclear provisions will remain with parent group

* Plans follows spin-off by larger peer E.ON

* RWE shares close up nearly 17 pct

* Utility being advised by Goldman Sachs (Recasts, adds fund manager, details)

By Christoph Steitz   FRANKFURT, German utility RWE moved to restructure its businesses to better absorb the cost of nuclear plant closures on Tuesday, sending its shares up nearly 17 percent, their biggest one-day gain in seven years.

To extract funds from its healthier businesses, Germany’s second-biggest utility will hive off its renewables, grids and retail units into a separate entity and sell a 10 percent stake in an initial public offering late next year.

It said it would keep its conventional power generation business, including its remaining nuclear plants and the liability for their shutdown, hoping to avoid a political stand-off over nuclear provisions that led peer E.ON to backtrack on a similar plan.

RWE’s Chief Executive Peter Terium was tight-lipped as to why the group decided to split now, a year after larger peer E.ON said it would spin off power plants, energy trading and oil and gas activities into a separate unit, Uniper.

Analysts, however, said RWE’s plan should ease concerns in Berlin, which has been worried that utilities would not honour the costs of Germany’s policy to close its nuclear plants by 2022. Political pressure forced E.ON to change its plans and take back its German nuclear plants along with the 16.6 billion euros ($17.6 bln) in provisions…….

NUCLEAR EXIT

Squeezed by a decline in wholesale power prices and a surge in renewables, German utilities are struggling to make money operating coal- and gas-fired power plants.

In addition to falling prices, the utilities have suffered from concerns over their ability to come up with as much as 80 billion euros in combined funding to pay for shutting down the country’s nuclear plants by 2022….. http://www.reuters.com/article/2015/12/01/rwe-restructuring-idUSL8N13Q2CP20151201#CbUEEVuQLV8LBJoJ.97

December 2, 2015 - Posted by Christina Macpherson | business and costs, Germany