Legal advice suggests British Energy restructuring deal will collapse in Europe

14th January 2003

British Energy may be forced to close nuclear plants

Greenpeace have published legal advice from leading competition lawyers (1) which suggests the British Energy restructuring plan will fail to get European Commission approval. Greenpeace has contacted the Secretary of State for Trade and Industry and urged her to withdraw Government support for the restructuring plan.

British Energy 's restructuring proposal involves increased state aid to keep it from bankruptcy, which has to receive approval from the European Commission. At the moment there is nothing in the plan to compensate competitors, who are unfairly shouldering the restructuring burden of keeping nuclear power stations running. Compensatory measures are likely to include the closure of some of British Energy 's nuclear power plants to limit or reduce the company's presence on the electricity market.

The advice from Jon Turner and Paul Lasok Q.C. is that, in order to meet the conditions for European Commission approval, the plan "will need to be revised to include specific proposals for compensatory measures in favour of competitors." Without such proposals "the likelihood that the EC Commission would ultimately approve the restructuring plan announced by British Energy and supported by the UK Government, must be small as matters stand. "

British Energy must gain agreement from all creditors involved by 14th February if the restructuring plan is to get any further. The initial loan of £650 million that was extended last November will mature on 9th March 2003. It is completely uncertain what will happen after this date.

Dale Vince, Managing Director of Ecotricity comments, "It is great to hear that the public may be spared the cost of paying such a ridiculous sum of money to continue to prop up British Energy, especially as public opinion shows that no one wants nuclear power. The Government should instead be concentrating on shutting down nuclear power plants which are an environmental time bomb. If they want to side with public opinion they should look to developing renewable energy which is safe, clean and economic and the answer to all the UK's energy needs. We have a moral obligation to close nuclear down now for the good of everyone."

Matthew Spencer of Greenpeace says, "The Government is demonstrating crude favouritism to nuclear power in supporting the British Energy restructuring proposal and at the expense of sustainable energy generators. Fortunately European law protects us from governments who want to hand over millions of pounds of public cash to failing private companies. They should consider the British Energy crisis an opportunity to remove the cancer of nuclear power from our energy system and negotiate the rapid closure of British Energy's reactors."