The Competition Law Angle of a Nuclear Phase-Out Reversal

Last week, the new president of the German Cartel Office, Andreas Mundt, was reported to only accept an extension of the life-span of the German nuclear power plants in return for competition enhancing concessions by the four major German utilities, E.ON AG, RWE AG, EnBW AG and Vattenfall Europe AG.  

The phase-out of the nuclear power plants was agreed in the 2001 “atomic consensus” (Atomkonsens) and implemented through the 2002 “exit amendment” (Ausstiegsnovelle) of the Atomic Energy Act (AtG). While the current coalition govenment has in principle agreed to extend the life span of nuclear power plants, details are still very much a subject of political debate.

Mr. Mundt highlighted a new dimension of the discussion. He pointed out the phase-out would lead to the big four utilities losing 22% of their generation capacity. As a consequence, the phase-out would give smaller competitors the chance to step in. Hence, there was a strong competitive aspect to the the reversal of the phase-out. In contrast, extending the life-span of the nuclear power plants would maintain the status quo.

The Cartel Office did not yet have a final strategy to counteract this, Mr Mundt said. He advised to keep the competition issue in mind when discussing the extension of nuclear power, and suggested to possibly distribute power plant capacities differently, either physically or through “electricity procurement rights” (Strombezugsrechte).

The head of the 8th Decision Division of the Office, Carsten Becker, was even more specific. He reported said that there was no reason why additional capacity should not be transferred to competitors. It was not necessary for the nuclear power plants to be operated by their current owners. If smaller competitors were not interested, the big four could be forced to transfer fossil capacities.  A combination of a transfer of capacities and compensation payments was also an alternative.

Source: Handelsblatt

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