EC Authorises Transfer of Nuclear Assets from BNFL to NDA

April 6, 2006

However, the NDA will continue to commercially operate some assets until their closure and may not always fulfill 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 EC has imposed strict conditions for the operation of these assets by the NDA.

The NDA is a public authority created to manage the decommissioning of public sector nuclear assets in the U.K. It will decommission a number of assets previously owned by BNFL, including the Magnox nuclear power plants and the THORP and SMP plants of the Sellafield site. All assets and liabilities linked to the sites to be decommissioned will be transferred to the NDA. Should assets not match liabilities, the U.K. government will cover the shortfall.

Until the transfer of the nuclear plants to the NDA, BNFL was the second nuclear electricity generator in the U.K. THORP is a nuclear spent-fuel reprocessing plant. SMP is a Mox production plant.

Following an in-depth investigation opened in December 2004 (IP/04/1430), the EC took the view that the polluter-pays principle applies to nuclear liabilities. Operators of nuclear plants should cover the decommissioning costs for their plants. The EC used several computation methods to determine whether BNFL completely fulfilled these obligations. All of them concluded that BNFL had complied with the polluter-pays principle. The EC concluded therefore that the measure did not involve state aid to BNFL.

The NDA will continue to operate some of the assets and may, for some of them, not comply with the polluter-pays principle. The EC authorised a limited derogation to this principle for the NDA on the grounds that this authority will only operate the power plants for a residual time, with a view to closing and dismantling them as soon as possible. The EC considers this derogation to include state aid. In order to limit the impact of this aid on competition, the EC imposed the same conditions on the NDA as the ones it imposed on British Energy, the other British nuclear plant operator, in the framework of its restructuring plan (see IP/04/1125).

The NDA will have to comply with pricing restrictions when selling its electricity directly to business consumers. It will not be authorised to use the aid to undercut wholesale prices. Regarding the THORP and SMP plants, which will continue to be operated commercially for a longer time, the EC authorised their transfer to the NDA under the condition that any future contracts they would conclude would cover all incremental nuclear liabilities generated by the contract.

The EC also found the measure to be in line with the objectives of the EURATOM Treaty.

More information on the case is available at:
http://europa.eu.int/comm/competition/state_aid/register/ii/by_case_nr_224.html#19337.

Source: European Commission.