DUESSELDORF, Germany (Reuters) - Municipal shareholders in RWE have called on Germany's biggest power producer to drive a hard bargain in talks with the government over compensation for a planned phase-out of coal-fired power plants.
A government-appointed commission has proposed Germany shut down all of its coal power stations by 2038 at the latest, recommending at least 40 billion euros ($45.7 billion) in aid to the regions affected.
The move deals a particular blow to RWE, which operates 13.3 gigawatt (GW) of lignite and hard coal-fired power plants in Germany, significantly more than smaller peers LEAG, EnBW, Uniper, Steag and Vattenfall
"From the municipalities' point of view, the decisions can only be absorbed financially if there is adequate compensation," said Ernst Gerlach, head of VkA, which represents RWE's municipal shareholders.
"RWE should take a tough stance in the pending negotiations over power plant shutdowns," he said on Wednesday.
Gerlach said the municipalities hold about 18 percent in RWE after some cities and regional authorities sold shares in the group following years of poor performance. Shares are down 78 percent from their all-time high in 2008.
RWE has said that the commission proposals, which foresee 12.7 GW of plant closures by 2022, would cause severe job cuts at the group, which employs about 10,000 staff in the Rhenish coal mining area alone.
"We are very concerned by the looming staff reduction. An RWE worker driving an excavator cannot simply find a new adequate job," Gerlach said.
The commission's proposals also include a recommendation to permanently cease mining activities at Hambach Forest, RWE's key source of lignite, the scene of riots and significant media attention in the run up to the coal exit talks.
Bernstein reckons that shutting down Hambach as well as the power plants it supplies will result in a 2.25 billion to 3.8 billion euro hit for RWE.
"Clearing Hambach Forest should not simply be given up," Gerlach said, adding RWE should wait for the next ruling after a German court halted activity at the site in October.
($1 = 0.8747 euros)