Hitachi- from the country that brought the world Fukushima

Hitachi- from the country that brought the world Fukushima
We feel very sad for the people of Japan who want to end nuclear energy whilst a potential new government and big business are desperate for it

No Fukushima at Oldbury

No to Fukushima at Shepperdine!

No to Fukushima at Shepperdine!
オールド全く福島ません

Friday, 25 June 2010

Temperature rises over Berlin’s nuclear tax proposals

This has implications for Shepperdine and Wylfa as E-on and RWE will be looking to get this money back from somewhere!

Will us silly Brits pay again?

It is good that we have such a good sense of humour in the UK and we never feel too downtrodden by Global Giants.

Temperature rises over Berlin’s nuclear tax proposals


By Paul Betts ---The Financial Times

Published: June 24 2010 22:51
Last updated: June 24 2010 22:51

Germany continues to irritate eurozone partners with its “worthier than thou” approach to budgetary and economic discipline. This week, Wolfgang Schäuble, the country’s finance minister, once again lectured his European critics on the need to curb excessive deficits and Germany’s traditional role as “an anchor of stability”.

But that does not mean that Berlin is a model of virtue when it comes to ways of raising taxes to plug its deficits. It is just as opportunistic as its neighbours and there could be no better example than its current controversial proposals to tax its nuclear power producers.

The country’s utilities, especially Eon and RWE, the two biggest, are understandably furious. The irony is that when the new coalition came to power 10 months ago free from anti-nuclear parties, they felt that Berlin would at long last give greater support to the nuclear sector.

Not that they expected a sudden renaissance in the nuclear industry. Germany is committed to shutting down all its nuclear plants and this policy has not changed. But the new government was on the whole favourable to extend the life of Germany’s 17 nuclear plants. In exchange for the additional earnings the industry would derive from this life extension, the government would claw back a slice of these profits. In turn, these funds would be used to reinvest in new renewable energy projects.

But since Angela Merkel’s re-election last September, the world has changed and so have her government’s economic priorities. The emphasis is now clearly on cutting the budget deficit and in this pursuit Berlin has decided to apply a little realpolitik. The concept, after all, is a German one. Rather than increase value added tax or income taxes, what better and more politically expedient a way to raise extra revenues than taxing the country’s fat utilities.

Like the banks, utilities are sitting ducks these days with few, if any friends. Unlike the banks, however, it is much harder for them to pass on the extra costs of any additional levies to their customers. Not only are they regulated industries, but the complex way electricity prices are set would make it difficult to offload the additional nuclear costs on customers.

So the government is now not only considering imposing a sizeable clawback on part of the profits utilities would earn from an extension of the life of their nuclear plants, but also levying a windfall nuclear tax. This would immediately raise €2.3bn a year to help cut the budget deficit and would not be linked to any proposed nuclear plant life extension.

Berlin justifies the new windfall tax on the basis that utilities have been enjoying extra profits from their existing nuclear production as a result of the introduction of carbon trading in Europe. And what better way of raising some much needed cash than claiming a chunk of the carbon trading windfall nuclear power producers are now reaping?

The trouble, as a report this week by investment banking group Execution Noble notes, is that this new windfall tax risks severely undermining the earnings, dividends and cash flow of big utilities. No wonder then that these groups are considering legal action against Berlin and, worse, threatening to shift even more investments outside Germany. But their chances of swaying Berlin look slim. They may rightly consider the proposed nuclear windfall tax completely unreasonable, but in the current climate it looks inevitable.

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