Nuclear phase-out: what the ruling of the constitutional court means

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Maintenance work in the defective Krümmel nuclear power plant in 2009

Photo: A3576 Maurizio Gambarini / dpa

The verdict surprised even industry experts: on Thursday the Federal Constitutional Court (BVG) ruled that the compensation for three old nuclear power plants must be completely reorganized.

Vattenfall's Krümmel and Brunsbüttel nuclear power plants and RWE's Mühlheim-Kärlich nuclear power plant are affected.

In 2001, all three systems were allocated certain residual amounts of electricity, which they were still allowed to produce until their planned shutdown.

But they could no longer have exploited this because the black and yellow federal government had reorganized the nuclear phase-out in March 2011.

The government therefore promised the companies compensation.

But the corresponding law was unsuitable for this, as the highest independent constitutional body of the judiciary has now determined.

The judgment is politically, economically and also morally important.

A classification.

Political Consequences

The verdict is extremely embarrassing for the state.

After all, it shows the inability of the black and yellow federal government of 2011 and the current grand coalition to make the nuclear phase-out completely legally secure.

The requirements for compensation for the nuclear companies turned out to be inadequate in two respects:

• Firstly, Vattenfall and RWE were forced to act.

  The government demanded that the corporations make serious efforts to sell residual electricity to competitors.

  Only if this does not succeed are they entitled to state compensation.

  In fact, the only possible buyer would have been the energy company Uniper.

  He would have tried to push prices down massively.

  If the corporations were to reject Uniper's offer, the state could accuse them of not having made sufficient efforts to sell their residual electricity - and of canceling their compensation.

  The BVG considers this to be unconstitutional.

• Second, the corporations still have no legal security to this day.

  The BVG had already asked the government in December 2016 to improve the requirements for compensation.

  The government then presented its amendment to the law in June 2018.

  But this was apparently so inadequate that it has not yet been approved by the EU Commission.

  Accordingly, the amendment has not yet come into force.

The federal government must now regulate the compensation from scratch.

Simple repairs should not be enough, writes the court.

There is currently no deadline for a new law.

Economic consequences

The economic height of the ruling is comparatively limited.

According to estimates by the Federal Environment Ministry, the remaining electricity volumes that the corporations and the federal government are fighting over are worth a high three-digit million amount.

For comparison: the total costs of the nuclear phase-out are estimated at several dozen billion euros.

For the already battered energy companies, the verdict is good news.

After all, they should soon be less under pressure to sell their residual electricity.

Only Vattenfall had directly sued.

But after the court ruling, RWE is also hoping for better opportunities for state compensation or a private sale of its residual electricity volumes at a fair price.

Moral Consequences

Looked at soberly, the dispute over compensation is inevitable.

The regulatory norms of the Federal Republic of Germany prescribe that companies have the greatest possible legal security, especially with regard to their property rights.

The BVG ruling ensures exactly this.

The dispute must also take place from a shareholder perspective.

After all, corporations like Vattenfall are obliged to fight for lost revenue.

Otherwise you could be sued by shareholders because you could endanger the company's value.

Morally, however, the dispute over compensation appears questionable.

Because the compensation in the room concerns three nuclear power plants, of all things, which had massive deficiencies:

• Vattenfall's Krümmel and Brunsbüttel nuclear power plants had to go offline for several years before the nuclear phase-out in 2011 due to serious safety deficiencies.

• RWE's Mühlheim-Kärlich power plant was only in operation for a total of 30 months.

  According to a ruling by the Federal Administrative Court in 1988, the Rhineland-Palatinate state government under the then Prime Minister Helmut Kohl imposed insufficient security requirements on RWE.

  The building permit was forfeited.

  Mühlheim-Kärlich had to be dismantled again.

  RWE was allowed to transfer part of its residual electricity to other nuclear power plants.

The remaining electricity volumes, which are now being disputed, also exist because two corporations and a federal state have violated German standards for nuclear safety.

If the companies had adhered to these requirements, they might have produced their respective amounts of electricity long ago.

The dispute over residual amounts of electricity, some of which are decades old, also seems to some to have fallen out of time.

"Anyone who is still fighting for their long-shutdown nuclear power plants in 2020 instead of the energy transition has not recognized the signs of the times," says Sylvia Kotting-Uhl, the Green's nuclear policy spokeswoman.

File number: 1 BvR 1550/19

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