Friday, February 6, 2015

A letter of 4 lines worth a billion dollars?

When the Fukushima nuclear disaster occurred in Japan in March 2011, the German government ordered the oldest nuclear power plants in the country to be shut down for three months.
What everybody knew:
The plants from the the 1960s/1970s were to undergo unscheduled safety checks.

But, crucially, this reason was not explicitly stated in the shutdown directive.

The power companies were upset but complied and filed a court case for damages of 880 million Euros (over none billion dollars) alleging the government had acted improperly. Having filed the court case, the power companies could have re-started the reactors immediately under the terms of applicable German administrative law.

They chose not to but were soon faced with a problem: what to when the three months moratorium ended.

At this point, events get interesting. A few days before the end of the mandated shutdown, the then CEO of the big provider RWE asked the state governor of Hessen, responsible for one of the stopped plants for written guidance. This guidance arrived just days before the end of the shutdown and said that the government assumed the power company would not assert its right to re-start the reactor so as to maintain good relations with the state government [our translation].

Two days later, the company announced it would not put the affected pant back into operation, and another company with old reactors in another state cited this letter as justification to keep its plant shut.

This letter kept the law suit against the federal government alive with a high probability of win for the companies because the shutdown directive had not mentioned safety concerns as the reason for the action.

The request for "guidance" was leaked to the media only recently, and the wording in itself has fueled the suspicion that the government had left the barn doors wide open intentionally by omitting the plant safety aspect from the initial directive and by then bolstering the companies' case with the four line "assumed that..." letter.

One of the former heads of nuclear power safety stated that the court case would have been a virtual slam dunk if the suspiciously worded request for guidance had not surfaced.

The experts are still out on the question if the new information will lead to the dismissal of the damages claim or not.

[Update 12/6/2016] Germany's constitutional court just decided that the government must compensate plant operators for the loss of business caused by removing nuclear power plants from the German power industry. The court did not decide on the amount, but estimates are around 19 billion Euros. The government and the operators are currently negotiating the modalities and cost of long term waste storage, and it was expected that the government would assume this responsibility in return for the power companies dropping lawsuits.
The blogster feels that the companies will likely use the freshly gained leverage to lower their mandated dismantling and storage contribution, which was set at 23 billion Euros.

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