The threat is not exactly a carrot, but as a stick, it won't work either, the government has warned.

German Chancellor Angela Merkel's new spokesman Steffen Seibert said threats "won't influence the results of the discussions" over how long the likes of Eon, RWE, Vattenfall and EnBW will be allowed to keep their nuclear reactors running. "When talks are ongoing, it really isn't helpful for talks when any threats are made public."

Merkel's government for the past months has lengthily debated whether to extend the lifetime of Germany's 17 nuclear reactors, scheduled to go offline by the end of 2020.

The utilities had warned that a planned tax on fuel used in reactors could make them unprofitable, thus speeding up the country's exit from nuclear energy. The utilities want the opposite -- they are eager to extend the running times of their reactors beyond the current phase-out plan, well aware that they're significant cash cows.

Because of energy security and climate change concerns, Merkel's pro-business government generally agrees to keep nuclear in the mix, but it wants part of the utilities' additional income in return. The fuel rod tax is aimed at compensating for the costs of nuclear waste disposal, and it could hand Berlin an estimated $2.75 billion per year.

Berlin has said it will unveil its overall energy strategy and a final decision on the lifeline of the country's nuclear power plants in September.

Individual proposals have ranged from sticking to the 2020 deadline, as envisaged under a phase-out law drafted by a former government, to extending their lifetime by as much as 28 years.

The utilities have said they want at least 15 years of additional running time and have proposed to divert several billions of their additional profits in return for a cancellation of the fuel tax.

The next round of negotiations is to begin Aug. 26, when Merkel is to meet the chief executive officers of Eon and RWE as part of her energy tour.

It's not an easy decision for Merkel, as nuclear power is still a hot potato issue in Germany. The plan to scrap the nuclear phase-out has sparked significant opposition with political and public players. More than 120,000 people demonstrated against the controversial energy source in April, forming a human chain that stretched 75 miles through northern Germany.

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