German utilities rise on news of nuclear waste cost savings

Power utilities E.ON and RWE are able to cover their contributions to Germany’s nuclear waste storage costs in one lump-sum payment, according to the CEOs of both groups.

RWE, E.ON, EnBW and Vattenfall agreed with the government in October to start contributing in 2017 to a €23.6bn fund in exchange for shifting liability for nuclear waste storage to the state, giving investors greater clarity over the companies’ future finances.

Under the deal, E.ON and RWE must pay about €10bn and €6.8bn, respectively.

The companies had been pushing for favourable terms of payment, and the October deal allows them to transfer the funds at one stroke by the middle of the year or in more costly instalments over 10 years.

Shares in RWE had risen 3% by 11.49am in Frankfurt, while E.ON shares had risen 1.6%.

“We don’t need to draw on the possibility of payment by instalments,” RWE CEO Rolf Martin Schmitz said in an interview with Die Welt published on Monday, adding that RWE was “well positioned” after raising billions of euros in a stock listing of a minority holding in energy group Innogy.

The remarks chime with those from E.ON CEO Johannes Teyssen, who told newspaper Rheinische Post that the group had enough financial flexibility to avoid paying in several steps.

Teyssen said E.ON needed to raise cash, either through a share sale, hybrid issues or convertible bonds on shares of Uniper — the power plant and energy trading unit it spun off in September — to come up with the money.

Asked whether he was concerned that E.ON, the shares of which have fallen 13% over the past year, could eventually be acquired, Teyssen said E.ON was not a “takeover candidate”.

He said he was in regular talks with potential investors interested in buying shares in E.ON, adding that activist shareholder Cevian, recently reported to be interested in buying a significant stake in the business, was not among them.