EU approves bail-out of British Energy
The European Commission has approved a controversial £4 billion Government backed rescue plan for British Energy.
British Energy, which operates eight nuclear power stations in the UK and supplies electricity to the UK wholesale market and some large businesses, got into deep financial trouble in 2002.
The Government then stepped in with an emergency £650 million loan to prevent the company going bankrupt, and in 2003 helped broker a rescue plan with the creditors that could amount to £5 billion over eighty years.
Leading US shareholders are, however, unhappy with the plan, saying that it would only leave shareholders with a tiny stake in the company. This morning, British Energy announced that it would be seeking a de-listing from the Stock Exchange, which would mean its shares could no longer be traded, to prevent the possibility of the restructuring plan being vetoed by shareholders and the company being placed in administration.
Giving its ruling yesterday, the Commission said that it was “satisfied that the new structure of British Energy will ensure that aid is exclusively used for the decommissioning of nuclear power plants in the future.”
British Energy will ring-fence its nuclear activities, which the EU ruled is the only part of its operations eligible for state aid, and create three separate businesses with separate accounts: one for nuclear, one for non-nuclear generation, and one for direct sales.
To protect competition, the Commission also required British Energy to cap its production capacity and not undercut wholesale prices.
The decision was welcomed by the Secretary of State for Trade and Industry, Patricia Hewitt. She said: “We have said from the outset that our aid complied with the Commission’s rules and this approval confirms that. I would like to thank all concerned for their hard work in achieving a successful conclusion to this case.
“The Government’s main objectives in assisting British Energy remain safety and security of supply. Contingency plans remain in place to secure those objectives if the restructuring plan fails for any reason and the company decides administration is the only option.”
The decision, however, was condemned by Friends of the Earth who said it provided a get out clause for those companies who fail to put aside enough money to dispose of their nuclear waste.
Campaigner Roger Higman, said: “This is a disgraceful decision and potentially an appalling precedent. British Energy should pay its own clean-up costs by putting up its prices. It should not load its radioactive legacy on to UK taxpayers. The Commission has failed to uphold the polluter pays principle.”
