The longstanding legal dispute between the German federal government and power utilities RWE, Eon, EnBW and Vattenfall was finally settled on 5 March. The four companies will receive compensation of €2.4 billion ($2.86bn) as part of the nuclear phase-out. The federal government is following a requirement of the Federal Constitutional Court, which had declared the final nuclear phase-out, decided by politicians in 2011, to be legal and rejected corresponding complaints from the corporations. However, it asked the federal government to provide partial compensation and an initial agreement was then granted by the Federal Constitutional Court in autumn 2020.
Germany had announced a nuclear phase out plan in 2011 in the wake of the Fukushima disaster sparking a series of legal actions by the energy companies. Germany stipulated that the last of the then 17 active nuclear plants must be taken off the grid by the end of 2022 and eight plants were closed immediately. This was just a year after the government had approved extending the operating life of the plants as a result of which the companies began investing in upgrading equipment.
Sweden’s Vattenfall group sued the federal government before an international arbitration tribunal stating that the nuclear phase-out was unlawful interference with its property rights. In December 2016, the Federal Constitutional Court (Bundesverfassungsgericht) in Karlsruhe ruled in that the 2011 phase out decision had violated some property rights, opening the way for the utilities to seek compensation. This forced the government to amend the Atomic Energy Act in 2018, agreeing to pay compensation of up to €1 billion. However, in September 2020, the court said this did not meet the guidelines the court had laid out in 2016. Moreover, it would have required European Commission approval, and the companies would only know the exact amount of compensation in 2023.
In the eve nt, the latest agreement appears to be acceptable to all parties. Vattenfall is to receive the biggest payout of €1.425 billion. RWE receives €880 million, EnBW €80 million and Eon/PreussenElektra €42.5 million. The money will also compensate the companies for residual electricity that they can no longer use in their own plants after the nuclear phase-out.
As part of the agreement, the companies have undertaken to withdraw all pending lawsuits and forego further legal action. This also includes Vattenfall's international arbitration proceedings against the Federal Republic of Germany at the International Centre for the Settlement of Investment Disputes in Washington on the basis of the Energy Charter Treaty.
Jochen Flasbarth, State Secretary in the Federal Environment Ministry said the federal government wanted the legal disputes to end and a settlement to be reached. "The agreement was achieved at a price that is well below the expectations of the companies, also well below the amount that was in the room before the arbitration court in Washington," he said.
However, Vattenfall President Anna Borg, said the agreement was "ultimately acceptable", adding that it would “now put an end to many years of costly and time-consuming disputes about the German nuclear phase-out”. Vattenfall confirmed that the arbitration proceedings would also be resolved.
Eon subsidiary Preussen-Elektra head, Guido Knott, also welcomed the agreement, noting “we can continue to concentrate on our mission: the safe operation and dismantling of our nuclear power plants”. RWE also welcomed the agreement. The settlement will involve another amendment to the Atomic Energy Act, and the European Commission will have to examine the agreement with a view to its compliance with the state aid law.
