EU approves BNFL asset transfer to NDA

11 April 2006

The European Commission has formally authorised the transfer of nuclear assets from British Nuclear Fuels (BNFL) to the Nuclear Decommissioning Authority (NDA).

Following its formal investigation, launched in December 2004, the Commission concluded that BNFL complies with the polluter-pays principle and has therefore received no state aid. However, the NDA will continue to operate commercially some assets until their closure and may not always fulfil the polluter-pays principle. In this case, the state intervention regarding the nuclear liabilities could constitute state aid. In order to limit the potential distortive effect of such aid, the Commission has imposed strict conditions for the operation of these assets by the NDA.

Competition Commissioner Neelie Kroes said “I am committed to taking full account of the polluter-pays principle in the implementation of state aid policy,” a reference to the principle that operators of nuclear plants should cover decommissioning costs. Using several different methods the Commission concluded that BNFL had complied with the polluter-pays principle. However, as the NDA will continue to operate some of the assets it may, for some of them, not comply with the polluter-pays principle.

The Commission has authorised a limited derogation to this principle for the NDA, in particular on the grounds that the NDA will only operate the power plants for a residual time, with a view to closing them as soon as possible and to dismantling them. The Commission considers this derogation to include state aid. In order to limit the impact of this aid on competition, the Commission has imposed the same conditions on the NDA as those it imposed on British Energy in its restructuring plan. Specifically, the NDA will have to comply with pricing restrictions when selling its electricity directly to business consumers and will not be authorised to use the aid to undercut wholesale prices. For the THORP and SMP plants, which will continue to be operated commercially for a longer time, the Commission authorised their transfer to the NDA under the condition that any future contracts would cover all incremental nuclear liabilities generated by the contract.

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