HANDELSBLATT EXCLUSIVE RWE to Place Subsidiaries under Separate Leadership

CEO Rolf Martin Schmitz plans separate management of RWE's power and generation units to boost flexibility in a changing energy market.
RWE CEO Schmitz during news conference in Essen

There are more changes in store at RWE, Germany’s second-largest utility, less than a year after its renewables business was spun off into a separate publicly-listed company, Innogy.

RWE Chief Executive Rolf Martin Schmitz plans to place the utility’s two key subsidiaries, RWE Power and RWE Generation, under separate leadership, according to information obtained by Handelsblatt.

Matthias Hartung, who plans to retire, currently leads both subsidiaries. RWE Power includes the utility’s brown coal and nuclear businesses, while RWE Generation includes its black coal, gas and hydroelectric businesses.

The plans call for Chief Technical Officer Roger Miesen to take over at RWE Generation and Chief Financial Officer Frank Wiegand to take over at RWE Power after Mr. Hartung steps down at the end of the year.

Both subsidiaries can act more flexibly and focus on their respective energy sources. RWE spokesperson

By placing the subsidiaries under separate leadership, RWE Generation will be better positioned to participate in a consolidation of the conventional electricity-production market in Europe. This will leave RWE Power free to focus on the uncertain future of brown coal mining in the Rhine region and to wind down the utility’s nuclear operations.

“Both subsidiaries can act more flexibly and focus on their respective energy sources,” a RWE spokesperson said, but declined to provide any additional details about the proposed leadership change.

As part of its transition to renewable energy, Germany plans to phase out nuclear power by 2022 and also plans to exit coal production, though no fixed date has been set for the latter.

There’s growing speculation that the industry, faced with mounting criticism from environmentalists, could reach a compromise and set a fixed road map to phase out coal. Sources in the industry believe that both RWE and the German government are interested in such a solution.

Placing RWE Generation and RWE Power under separate leadership would make negotiations easier. But Mr. Schmitz’s plans still have to be approved by the supervisory board. Sources said the board is skeptical because the plans create more leadership posts at a time when the company should be streamlining bureaucracy to save money.