UK nuclear industry is allegedly “cheating the market”

Publish date: January 18, 2005

Written by: Vladislav Nikifоrov

The European Commission has launched an investigation into the British government’s allegedly illegal aid to the British nuclear industry, which has been beset in recent years by downwardly spiralling losses.

The European Union’s executive body is concerned that plans to move decommissioning liabilities from BNFL to a Nuclear Decommissioning Authority (NDA) will violate EU state aid rules, Nuclear Engineering magazine reported.

The British government plans that on April 1st 2005 the NDA will assume responsibility for managing public sector decommissioning liabilities across the country. Some of these are currently the responsibility of British Nuclear Fuels (BNFL), some of United Kingdom Atomic Energy authority (UKAEA). At the same time, BNFL will be restructured into a group of independent businesses called the British Nuclear Group, Nuclear Sciences and Technology Services, Spent Fuel Services, and Westinghouse.

An EC statement said that the asset transfer to the NDA will be done at no cost to BNFL but will relieve it from nuclear liabilities that it should normally have met under the ”polluter pays” principle. The EC considers at this stage of its analyses that this advantage provided by the British government is likely to be considered state aid under the EC Treaty.

State aid, under this treaty, is acceptable only if its negative effect on trading conditions is outweighed by a positive contribution to other objectives under the Euratom Treaty. The EC asserted that an in-depth inquiry would be necessary to analyse both the positive and negative effects of the move.

Mark Johnson of Friends of the Earth Europe commented on the EC announcement saying, ”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 the taxpayer when old reactors are shut down. It points to a systemic failure to govern energy markets in line with Europe’s overall political goals.”

Huge losses
British Energy (BE) has recorded a half-year loss of £234 million, almost four times the £60 million lost in the same period last year. The company said in a statement that its outlook is ”challenging”.

BE has suffered from continued delays in repairs at its Heysham 1 and Hartlepool plants – two 620Mwe AGR units at each remain offline. The outages have contributed to a 14 percent (4.6TWh) drop in nuclear generation compared to last year.

The company’s problems have been worsened by the fact that it presold its power at low prices last year. It is now unable to meet its generation commitments and is being forced to buy replacement power on the wholesale market at higher prices.

The BE statement said in full that the Heysham and Hartlepool units were not expected to return to service until very late in 2004 while ”the outlook for the company’s financial and trading prospects for the remainder of the financial year will be challenging.”

Hiding vulnerable information
Beside economical losses, the British nuclear industry would like to keep a lid on its nuclear waste issues. The European Court of Justice (ECJ ) is expected to rule that EU governments must divulge information to the EC about decommissioning military reactors, where such data does not compromise ”the essential interests of national security”. This follows a case against the British government, which refused to release information about its shut down of the Jason training reactor at the Royal Naval College in Greenwich.

Having alerted the Commission about the decision, the UK received demands for information about the decommissioning process, which it rebuffed, alleging that military reactors fall outside the Euratom treaty regarding such data transfers.

Brussels challenged this and ECJ Advocate General Leendert Geelhoed has now advised judges to find against Britain, saying non-essential military reactors (such as that in Greenwich) are covered by these Euratom rules, and that the UK ”is in breach of its obligations” by both restricting information and refusing to negotiate with the commission.

ECJ decisions typically take effect three to six months after the opinion is given, and usually adhere to the advocate general’s advice.

In October, the UK was threatened with a case at the ECJ over its failure to consult the EC before issuing a radioactive waste disposal licences for the country’s atomic weapons facilities in Aldermaston and Burghfield.