Court challenge to BE aid package

17 May 2003

AES said that the aid package, originally set at £650 million, seriously distorted the competitive market in Britain where a 40% drop in wholesale prices has forced several power stations into the hands of creditors.

Melanie Wedgbury, head of regulation at AES Drax Power, said that when EU authorities had approved the aid last autumn, it was on the basis of security of supply and nuclear safety. "They did not even consider and discounted our arguments on the anti-competitive nature of the aid," she said. "Normally, in an over-supplied market, prices will come down. But the market does not stand up under the EU rules when a government steps in and bails out a company which is then able to operate at below its allowable running costs." AES is separately challenging the government-backed restructuring plan for British Energy. British Energy is paying back the bulk of the £423 million it has borrowed from the government, from the proceeds of its sale of Bruce Power.

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