German cabinet agrees on nuclear phaseout compensation for plant operators

BERLIN - German Chancellor Angela Merkel's (CDU) governing cabinet passed a legislative proposal by the Environment Ministry on Wednesday, promising financial compensation to the nuclear power plant operators RWE and Vattenfall for Germany's decision to exit the technology by 2022.

The environment ministry told press that nuclear power plant operators would receive a figure in the range between the "low single-digit billions of euros" and the "high three-digit millions of euros", depending on the exact amount of outstanding capacity used until the 2022 deadline.

The exact sum of taxpayer money actually handed to RWE and Vattenfall will not become clear until 2023.

In passing the legislative proposal, the federal government is responding to a verdict by the Federal Constitutional Court that RWE and Vattenfall both had the legal right to financial compensation for losses incurred as a consequence of Germany's abrupt U-turn on nuclear power in 2011.

The Karlsruhe-based court argued that the nuclear power plant operators had committed to high sunk cost (an asset which cannot be easily used for other purposes, note) in good faith on the basis of legal guarantees for future production levels.

When the federal government decided in a sudden reaction to the Fukushima catastrophe that Germany would phase out nuclear power in 2011, Merkel had only recently promised nuclear plants a new lease on life by extending an earlier deadline for a binding exit from the technology set by her predecessor ex-chancellor Gerhard Schroeder (SPD).

The Federal Constitutional Court was subsequently open to the possibility of postponing the date of the nuclear exit once again to resolve the issue of outstanding claims. This proposal was rejected by Berlin however.

Seeking to obtain damages from the German government in the aftermath of the controversial decision, the Swedish company Vattenfall has filed a lawsuit against Berlin at a US-based international court of arbitration. According to the magazine "SPIEGEL", Wednesday's successful cabinet vote has significantly reduced the likelihood of Vattenfall winning the US court case against Germany as well.