Nuclear decommissioning authority investigated by Commission

The European Commission has launched a formal investigation into the UK government's plans to set up a Nuclear Decommissioning Authority on the grounds that it may break state aid rules.

The NDA is due to be established as of April 1st 2005 as a non-departmental public body in charge of managing most of the nuclear liabilities of the public sector. Assets belonging to British Nuclear Fuels Ltd (BNFL) will be transferred to the NDA who will then take on financial responsibility for the liabilities. It will also take on financial responsibility for liabilities at the UK’s Atomic Energy Authority sites and be responsible for managing the decommissioning of these assets.

As a result, BNFL will be split into two parts. The first part, comprised of such assets as the Sellafield Mox Plant or the Magnox nuclear stations, will be transferred to the NDA. The second one, comprised in particular of BNFL’s subsidiary Westinghouse, will continue normal commercial operations in a smaller, possibly renamed company.

The transfer of the first part to the NDA will be done at no cost to BNFL and will relieve it from nuclear liabilities that it should have normally met under the “polluter pays” principle – and it is this advantage that the Commission considers State Aid within the meaning of Article 87(1) of the EC Treaty.

The total cost of the liabilities transferred is €60 billion, equivalent to £42 billion.

In view of the complexity of the case, as well as the importance and size of the sums involved, the Commission is conducting an in-depth enquiry would be necessary to analyse the balance of the positive and negative aspects of the aid. Until the Commission has reached a decision, the UK authorities will have to put in place a transitory regime which will not be able to provide aid to BNFL.

The UK DTI welcomed the investigation. UK Energy Minister Mike O’Brien said: “We believe the NDA is compatible with EC State Aid rules. We understand the importance of the State Aid regime, fully support it, and understand the Commission’s desire to investigate. But we have taken necessary steps to ensure that the NDA can get on with its job from April 1 using existing resources.”

However, the decision has outraged conservationists and anti-nuclear groups.

“This type of ad hoc investigation by the Commission is not enough. It allows the European nuclear industry to continue cheating the market, selling power below cost, and then blackmailing taxpayers when old reactors are shutdown. It points to a systemic failure to govern energy markets in line with Europe’s overall political goals,” said Mark Johnston at Friends of the Earth Europe.

“The EU needs a pro-active strategy towards nuclear liabilities based on new internal market laws. Nuclear firms must meet all their costs from their own revenue, not from our taxes. A failure to ensure this will mean that further nuclear subsidy cases in other member states are inevitable,” he continued.

By David Hopkins

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