European Commission did not approve loan to nuclear generator
Greenpeace and renewable energy provider Ecotricity have written to Patricia Hewitt, Secretary of State for Trade and Industry, challenging the legality of her recent decision to loan £10 million to stricken nuclear generator British Energy [1]. Greenpeace and Ecotricity have discovered that the cash bailout was made without European Commission approval - a flagrant breach of the law governing state aid - and are demanding that the money be repaid to the taxpayer immediately.
The Government agreed to provide British Energy with a loan for up to £10m on 9th September and stated that "Notification of this loan under state aid legislation is underway" [2]. However, the loan was made without pre-notification and without receiving approval from the European Commission despite there being a legal requirement to do so. This means that the loan was illegal and must be repaid and that other power generators which may have suffered commercial damage can make legal claims for compensation as a result of lost profits.
The £10m loan was made until 27th September and no commitments were given by Government for what might happen after this period. However, any further cash after 27th September would run into exactly the same legal issues as the first loan and again be vulnerable to legal challenge.
If the Government refuses to withdraw the loan Greenpeace and Ecotricity may launch a formal legal challenge in the High Court.
Greenpeace believes that British Energy's nuclear power stations should be closed down because of concerns over safety and cost. Current excess generating capacity in the UK energy market of 30 per cent means that losing British Energy's nuclear contribution would not endanger security of supply [3]. A recent MORI poll showed that 72 per cent of respondents favoured renewable energy over nuclear generation [4].
Emma Gibson, Clean Energy Campaigner at Greenpeace, said:
" The safest and most cost effective thing the Government can do is to close British Energy's nuclear reactors. They are artificially distorting the market for power by propping up the bankrupt nuclear industry. The market refuses to back nuclear power and the public want renewable energy instead .The Government should end its flirtation with nuclear power and develop a new energy industry for the UK based on renewable energy and energy efficiency."
Dale Vince, Managing Director of Ecotricity, said:
"Propping up the nuclear industry like this makes no sense. If we were given the £10m instead of British Energy we could build enough onshore wind energy to power 10% of the country. Onshore wind energy is a very competitive form of energy as well as being renewable, clean and safe, everything nuclear is not. That's a better way to spend public money than propping up nuclear power stations for a few weeks"
A recent report by AEA Technology demonstrated that offshore wind farms off the coast of East Anglia would generate the same amount of power as the entire UK's nuclear sector. Britain has wind reserves that could generate three times the nation's current electricity needs.
Notes for editors:
- Copy of letter attached or available to download here
- DTI press release 9 September 2002
- British Energy currently contributes 20 per cent of UK electricity
- MORI poll, May 2002
- Sea Wind East report, Greenpeace UK, July 2002
