EON presses Merkel on extending nuclear power

German power giant EON posted mixed quarterly results on Wednesday and pressed Chancellor Angela Merkel to live up to her promise to extend the life of some of the country's nuclear plants.

EON presses Merkel on extending nuclear power
Photo: DPA

“There has long been a lack of clarity about the direction of Germany’s energy-policy,” chief executive Johannes Teyssen said. “This needs to change.”

Teyssen said German authorities needed to make “an environmentally and economically sensible decision on the future of nuclear energy in this country.”

Germany decided under previous centre-left chancellor Gerhard Schröder to phase out all nuclear plants by 2020. The conservative Merkel stuck to this decision in her first term while governing with his Social Democrats.

But her new centre-right coalition with the pro-business Free Democrats, in place since last autumn, has said it would extend the life of some of the reactors. She has not yet acted officially however, to the frustration of German power companies.

Their share prices have been weighed down by the uncertainty, with EON stock losing around 20 percent of its value since the beginning of the year.

On Wednesday, the shares fell by 0.65 percent to €23.29 in morning trading, while the Dax index of leading German stocks was 1.13 percent lower overall.

EON also fired a warning shot across Merkel’s plans to impose a nuclear tax, saying in a note to analysts this would shave €1.3 billion – €1.5 billion off its annual operating profit and threatening to cut back on investments.

The tax “might lead to a reduction in investments in order to maintain the group’s health,” it said.

EON also released better than expected second quarter operating results, though net profit fell by 9.0 percent to €1.7 billion ($2.2 billion) owing to tax effects and higher interest payments, the statement said.

Adjusted net profit, the figure focused on by analysts, slipped 1.0 percent to €3.3 billion, in line with an average analyst forecast compiled by Dow Jones Newswires.

On the operating level, EON reported better adjusted core earnings before interest and tax (Ebit) in the first half of the year of €6.1 billion, a gain of 11 percent from the first six months of 2009. Market forecasts had pencilled in a more modest figure of €5.83 billion. First half sales gained 6.7 percent to €44.3 billion, slightly lower than expected.

The power giant confirmed its full-year targets meanwhile, an increase of up to 3.0 percent in adjusted Ebit, and stable adjusted net profit.

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.