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Full investigation by EU into Britain’s subsidies to nuclear power companies

flag-UKBrussels to probe UK nuclear power plant deal, By Guy Chazan and Alex Barker , 11 Dec 13 Brussels is to launch a full investigation into whether the contract for Britain’s first nuclear power plant in a generation offers illegal state support, casting the project into doubt until at least next summer.

Joaquín Almunia, the EU competition commissioner, is preparing to announce the probe as early as next week, according to people involved in the case.

The deal that is under scrutiny is the contract signed in October between the UK government and French utility EDF for Hinkley Point C nuclear power station in Somerset. When built it will provide 7 per cent of the country’s electricity.

The agreement guarantees EDF a “strike price” of £92.50 per megawatt hour – roughly double the current wholesale price of power – for electricity produced at the £16bn plant over a period of 35 years.

However, it has always required approval from the European Commission, which can demand changes to any terms that distort competition through illegal state support.

EDF has made clear it cannot make a final investment decision on Hinkley or bring in co-investors – two state-owned Chinese groups, China General Nuclear Power Corp and China National Nuclear Corp have expressed an interest in taking a stake – before state aid clearance is received.

Given the complexity and importance of the contract, it was always likely the commission would order a full investigation into its terms. A key concern will be whether the government has “over-compensated” EDF with too high a strike price.

Other elements that will come under scrutiny are the rate of return on the project, the duration of the contract, arrangements for nuclear waste and decommissioning and insurance against a major nuclear event, as well as the UK’s infrastructure guarantee.

The probe will be a crucial test case in a bitterly contested area of policy. There is huge uncertainty over how state aid rules will be applied to plans for Europe’s next generation of power plants, especially any new nuclear reactors.

“It’s the first of a kind,” said one Whitehall official. “Nuclear hasn’t been looked at before.”……

December 12, 2013 - Posted by | general

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