German nuclear fuel tax illegal

Germany's nuclear power operators scored a major victory on Wednesday when the Constitutional Court in Karlsruhe declared a tax on nuclear fuel rods as illegal, enabling utilities Eon, RWE and EnBW to claim back about six billion euros ($6.76 billion).

Shares in the three German energy majors jumped between 2.5 percent and 3.2 percent on the news, with traders citing the prospect of them getting their money back.

In a long-awaited verdict closely watched by investors and analysts, Germany's top court said the tax, which was imposed between 2011 and 2016, was "formally illegal and void." The verdict overrules a decision by the European Court of Justice last year saying the tax did not breach European Union laws.

Government setback

The fuel rod tax required firms to pay 145 euros per gram of nuclear fuel each time they exchanged a fuel rod, which usually happens about twice a year.

Eon said it had paid about 2.8 billion euros between 2011 and 2016, while RWE and EnBW claimed they had paid 1.7 billion euros and 1.44 billion euros, respectively.

The tax was expected to raise more than 2 billion euros in annual government revenue and came in exchange for a pledge by Chancellor Angela Merkel to extend the lives of the country's then 17 operating nuclear reactors beyond 2022 - the date fixed under Germany's original nuclear phase-out plan.

But after the 2011 Fukushima power plant disaster in Japan, Merkel reviewed its nuclear policy, deciding to speed up the nuclear phase-out, and ordering the immediate shutdown of eight of the reactors. The nuclear fuel tax, however, wasn't stopped until 2016.

The verdict marks the second victory by German utilities over the country's nuclear policy. The court in December ruled that a decision to shut down all nuclear plants following Japan's Fukushima disaster violated some of their property rights. The decision has paved a way for the utilities to claim back stranded investments and power production rights.

uhe/jd (Reuters, dpa)