OVG Münster: Operating Licenses of E.ON’s Shamrock and Datteln Coal-fired Power Plants Expire at End of 2012

E.ON AG could not retract its declarations to close its power plant units 1 to 3 in Datteln and the Shamrock power plant in Herne, hence the permits expire at the end of 2012.  That is what the Higher Administrative Court of Münster (OVG Münster) held in two recent rulings.

The Datteln power plant units 1 to 3 supply Deutsche Bahn with approximately 20% of their electricity needs. Both plants do not only provide electricity but also supply a large number of households with district heating.

The Shamrock plant in Herne has been in operation since 1957, the Datteln power plants since 1962. In December 2006 E.ON declared  to close down the plants as of 2013 to avoid retrofitting. In July 2004 new requirements for existing power plants came into force, pursuant to which air pollution has to be reduced. The operators of existing power plants had two options. First, they could retrofit the plants to comply with the requirements as of 1 January 2011. In that case the plant can be operated without any time limit. Secondly, operators could declare by the end of 2006 not to continue operating the plant beyond 31 December 2012, in which case the plants could be operated without a need for retrofitting until 31 December 2012.

E.ON opted for the second possibility. In late 2010, however, E.ON retracted its declarations, arguing the completion of the new Datteln power plant unit 4 was behind schedule, hence the company needed the Datteln 1 to 3 plants and the Shamrock plant in Herne. As of 1 January 2011, the plants would comply with the new requirements, the company said. Retrofitting was not necessary. The use of a different type of coal (a more expensive quality) and various cleaning procedures, which had been carried out, were sufficient.

E.ON intends to replace the Datteln 1 to 3 power units by the new, more efficient Datteln 4 power plant. However, in September 2009 the Higher Administrative Court in Münster (Oberverwaltungsgericht Münster – OVG) revoked the zoning plan (Bebauungsplan) for the area in which the Datteln 4 project is situated. Currently efforts are under way to set up a new zoning plan, but it is not yet clear if and when E.ON can continue construction.

The state Ministry for Climate Protection and the Environment (MKULNV) came to the conclusion that E.ON could not retract its commitments to shut down the Datteln 1 to 3 power plant units and the Shamrock plant. It asked the district administrations of Münster and Arnsberg to issue notices stating the expiry of the operating licenses as of 1 January 2013. E.ON filed lawsuits against the notices, arguing the declarations made in 2006 were only mere declarations of intent without the intention to create legal obligations. The declarations to shut down the plant were not meant to surrender the licenses. At any rate, a retraction was possible before the stricter requirements for power plants entered into force. 

OVG Münster’s 8th Senate dismissed the cases. The court held that the declarations made in 2006 were legally binding. Thus the operating licenses would automatically expire on the day stipulated in the declaration (31 December 2012). The relevant provisions in the law explicitly foresaw an early date for making the declaration (end of 2006), following similar EU provisions. E.ON could not rely on the legal principle of frustration of contract or could argue that the basis of the transaction had ceased to exist (Wegfall der Geschäftsgrundlage). Neither could E.ON have relied on commissioning the new Datteln 4 power plant unit in time. When making its declarations in December 2006, neither a zoning plan nor a permit for Datteln 4 existed. Besides, E.ON had to expect lawsuits being brought against the plant and a subsequent delay of the project. Therefore E.ON acted at its own risk, when declaring to shut down the plants at the end of 2012.

Shortly after the lawsuit had been filed, the court suggested that the parties start negotiations aimed at finding out whether and under what conditions the power plants could be operated beyond 2012 in order to supply Deutsche Bahn and the district heating customers, the OVG press release points out. However, these negotiations were interrupted in December 2011.

The 8th Senate did not grant E.ON leave to appeal. E.ON can appeal this decision with the so-called “Nichtzulassungsbeschwerde” (appeal due to denial of leave to appeal).

In view of possible energy bottlenecks following Germany’s energy policy shift last year (and the immediate shutdown of eight nuclear power plants), the Federal Network Agency asked the government of North Rhine-Westphalia (NRW) to postpone the closure of E.ON’s four coal-fired power plants, Rheinische Post reported in August 2011. Whether the NRW government will act in favour of E.ON remains to be seen. Due to the recent mild winter, demand could be met. Yet there are calls for new conventional power plants, which can operate in times when renewable energy sources do not generate electricity due to unfavorable weather conditions. As building and operating theses plants in an environment where renewable energy enjoys priority lacks sufficient incentives right now, the question remains if the operating times of older plants like the E.ON plants need to be extended for a certain period.

Source: OVG Münster (ref.nos. 8 D 47/11.AK and 8 D 48/11.AK)

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