Merkel meets the nuclear fief leaders

How reassuring to know there is a strong german chancellor who will stand up to the might of E.on and RWE.

She is firmly putting them in their place!

Let us hope the british government will do the same!


LINGEN, Germany (Dow Jones)--German Chancellor Angela Merkel said Thursday that the proposed levy on nuclear fuel rods, which utilities have said would eat into their profits, is part of the government's efforts to reduce the public budget deficit.


"We're eyeing the levy to achieve our goal to consolidate the [federal] budget," Merkel told reporters.

"On top of that we have to discuss how the energy utilities will contribute to [the expansion of] renewable energies," she added.

Merkel made the comments after meeting the chief executives of the country's largest utilities, E.ON AG (EOAN.XE) and RWE AG (RWE.XE), at RWE's nuclear reactor Emsland in Lingen, western Germany.

Germany's nuclear reactor operators--E.ON, RWE, EnBW Energie Baden-Wuerttemberg AG (EBK.XE) and Vattenfall Europe AG (VTT-XE)--have warned that the government's plan to tax the fuel used in nuclear power plants could make reactors unprofitable and hasten the country's exit from atomic energy generation.

They have also said that the levy would hit their future earnings and might require them to reduce investment plans and sell assets to retain their credit ratings.

Merkel's center-right coalition has said it will raise EUR2.3 billion annually from the fuel-rod tax from 2011 as part of its EUR80 billion austerity measures for the coming years.

So far, it hasn't ruled out imposing a levy in addition to the fuel-rod tax, with the additional funds raised to be spent on renewable energy projects.

In its coalition agreement the government has vowed to postpone the agreed gradual phase-out of nuclear energy production to help achieve its ambitious climate protection goal and keep power prices at an acceptable level.

The government had originally planned to extend the operating lives of nuclear power plants under the condition that they're safe to operate and utilities give up a certain part of the profits they would generate by running the reactors longer. These funds would have been used to help fund the expansion of renewable energy sources, according to the coalition agreement.

-By Martin Rapp, Dow Jones Newswires; +49 69 29 725 503; martin.rapp@dowjones.com

(Andrea Thomas in Berlin and Jan Hromadko in Frankfurt contributed to this article.)