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Ecotricity and Greenpeace challenge British Energy bail out approval through the European Court

10th April 2003

Ecotricity and Greenpeace today filed a legal challenge to the European Commission's decision to approve UK state aid (1) to stricken nuclear energy company British Energy.

They will make a joint application to the European Court of First Instance in Luxembourg to annul the Commission's decision that the rescue aid to British Energy is compatible with European Community law.

The challenge is being made on the basis that the decision was based on serious factual errors. Specifically the challenge will contend that absence of aid would not have caused serious consequences, in terms of either nuclear safety or security of power supply in the UK (2).

If the challenge to the decision is successful it will stop the Government's continuing loan to British Energy. It will also undermine the basis of further state aid for British Energy, submitted by the UK to the Commission together with a restructuring plan on 7th March 2003.

Jim Footner, Greenpeace Clean Energy Campaigner said, "Greenpeace and Ecotricity aren't undertaking this action only as a challenge to the nuclear industry. This is about ensuring that renewable energy companies do not find themselves in a position of having to compete against a company like British Energy which has been provided with an unfair advantage through state aid funding."

Dale Vince, Managing Director of Ecotricity comments, "The bail out of British Energy is causing serious market distortion as it's allowing them to buy market share using public money. This is putting real pressure on brown and green suppliers and generators who don't have this support - and this in itself is a threat to security of supply in the UK. It's time for leadership from our Government at home, we can and should close down British Energy now."

Ends.

Notes to Editors -

For more information contact -

Greenpeace - Press Office tel: 0207 865 8255
Ecotricity - Nicola McDowall tel: 01453 769326; email: nicola.mcdowall@ecotricity.co.uk or Clare Summers tel: 01453 769303; email: clare.summers@ecotricity.co.uk

1) The aid from the government to British Energy counts as "state aid" because it advantages British Energy and disadvantages more efficient energy producers. European competition rules outlaw aid to companies that distorts or has the potential to distort competition - in this case between electricity generation companies.

2) Rescue Aid may be approved by the Commission only in accordance with its own strict guidelines, and must not only be the minimum amount necessary to keep the firm in business for the period during which the aid is authorised. It must also be "warranted on the grounds of serious social difficulties".

In the BE case the Commission found that the rescue aid was compatible with its guidelines. In particular the Commission accepted the claim that the absence of aid would have serious consequences in terms of both nuclear safety and security of power supply in the UK.

The Commission decision is, however, based on serious errors including: -

A finding that, without state aid, British Energy would have entered insolvency and would have to cease its operation, with the consequence that its stations would be shut down and left without supervision. Greenpeace and Ecotricity argue that the Commission did not consider the option of British Energy being placed into administration. They also did not consider an obvious, less drastic, possibility of closing only one or several of its stations as opposed to all.
A finding that nuclear power stations cannot be mothballed on grounds of cost and safety. Greenpeace and Ecotricity have provided expert evidence that in fact stations can be mothballed both safely and relatively cheaply.
A factual error as to British Energy's share of capacity generation and the impact that closure of British Energy stations would have on UK security of supply. Greenpeace and Ecotricity have provided expert evidence that British Energy could, for example, immediately close some stations and mothball others without presenting any security of supply concerns in the UK