EON SE (EOAN) wants to shutter a nuclear
plant in Bavaria seven months ahead of schedule, cutting power
capacity in the home of Bayerische Motoren Werke AG (BMW) and Siemens
AG as Germany’s biggest utility tries to save money.

EON notified the Bundesnetzagentur regulator and the grid
operator of its plan to close the 1,275-megawatt plant at the
end of May 2015 “because of its lack of profitability,” the
Dusseldorf-based utility said in a statement.

Grafenrheinfeld, in operation since 1982, was due to shut
under Chancellor Angela Merkel’s policy to switch off all atomic
plants by 2022 and replace them with renewable energy. The early
closing will save EON as much as 80 million euros ($110 million)
in nuclear-fuel taxes, TV station ARD Haupstadtstudio said
today. EON shares rose to the highest in more than a month.

The decision was “unavoidable,” EON said. “The continued
operation of nuclear power stations in Germany only makes
economic sense if they can operate for a sufficient length of
time without the burden of the nuclear-fuel tax,”

Grafenrheinfeld’s early closure will “strongly” drive up
costs for consumers, said TenneT TSO GmbH, the grid operator.

TenneT will have to “starkly increase interventions in the
market to stabilize the grid,” Chief Executive Officer Martin
Fuchs said in an e-mailed statement. TenneT already makes about
1,000 such interventions a year at a cost of 150 million euros,
to be paid by consumers.

TenneT doesn’t expect the shutting to endanger supply
security in the months from June until year-end, it said.

Declining Profit

The retirement of the nation’s oldest reactor still in
operation comes as EON seeks to cut costs amid declining profit.
The nuclear fuel tax set by Merkel is “strangling” EON’s
reactors because it’s coincided with lower wholesale power
prices, the utility said in October. EON reduced its workforce
by more than a quarter to 62,000 in the past three years.

Under German law, utilities have to ask the regulator and
the grid operator to shut a plant one year in advance.

RWE AG’s 1,284-megawatt Grundremmingen B reactor, also
located in Bavaria, is next on the list, with a planned close by
Dec. 31, 2017.

EON rose 2 percent to close at 14.21 euros, the most since
Feb. 24.

To contact the reporter on this story:
Stefan Nicola in Berlin at
snicola2@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Alex Devine, Tony Barrett