HOME / CORPORATE / VATTENFALL PROVES GERMAN COMPENSATION PLAN IS FLAWED

Vattenfall proves German compensation plan is flawed

Thursday, 12 November 2020

A German court has ruled in favour of Vattenfall in its case against the government relating to the nuclear power plants Brunsbüttel, Krümmel and Mülheim-Kärlich in northern Germany. The Swedish utility had argued that the conditions for compensation payments to nuclear power producers impacted by the country's nuclear phaseout policy, the Energiewende, were not clearly regulated and that previous amendments to the law could lead to a reduction of claims.

Vattenfall proves German compensation plan is flawed — The Federal Constitutional Court in Karlsruhe (Image: BVerfG)

Following the accident at the Fukushima Daiichi plant in Japan in March 2011, Germany decided it would phase out its 17 nuclear power units by the end of 2022 at the latest. RWE, EnBW and EOn were able to retain some of their nuclear power plants longer, allowing them to use up remaining quotas, but Vattenfall argued it was unable to do the same.

The Federal Constitutional Court, Bundesverfassungsgericht, in Karlsruhe, said the government must revise a 2018 draft law covering compensation for the early closure of nuclear plants because this did not meet the guidelines the court had laid out in 2016, when it warned that their closure might violate certain property rights.

A 2016 ruling had forced the government to amend the Atomic Energy Act in 2018, but the court said the changes were inadequate and had not yet come into force. The 2018 legislation, which required European Commission approval, meant the power companies would only find the exact amount of compensation in 2023. The Karlsruhe court found this "unreasonable".

In a written decision published today, the court said the government must now overhaul its system of financial compensation for companies impacted by the nuclear phaseout.

The court said: "The constitutional complaints are admissible and well-founded" since the fundamental rights of the complainants are violated because the 16th AtG Amendment has not entered into force and thus there is no statutory framework that remedies the violation of fundamental rights which the court found to be objectionable in its judgment of 6 December 2016."

The European Commission neither gave its approval nor could the letter of its Directorate-General for Competition of 4 July 2018 be classified as “binding communication” within the meaning of Art.3 of the 16th AtG Amendment, the court said. "Thus, the violation of fundamental rights persists, because no other remedial provision has been enacted," it added.

Welcoming the ruling, Vattenfall said the court had already objected in 2016 to the fact the utility can only sell the remaining electricity from its nuclear power plants, which were decommissioned in 2011, to a single energy supplier - on terms that can essentially be determined by this supplier itself. Vattenfall has thus asked for adequate compensation for this.

"The 16th AtG amendment from 2018 did not even begin to meet the requirements of the Federal Constitutional Court, but rather intensified the massive distortions of competition between energy suppliers," Vattenfall said.

"With its decision today, the Federal Constitutional Court has now confirmed that this 'Compensation Act' has not even come into force due to formal errors. In the opinion of the court, a new regulation requires substantial improvements. In particular, Vattenfall must be compensated for the fact that the residual amounts of electricity allocated by the legislator could not be used under reasonable conditions."

A lawsuit by Vattenfall is pending before the World Bank's International Centre for Settlement of Investment Disputes in Washington DC, concerning several billion euros for the permanent closure of the Krümmel and Brunsbüttel reactor units.