Nuclear bombshell

The European Commission is to check whether the establishment of the Nuclear Decommissioning Authority by the UK Government complies with EC Treaty competition rules.

The European Commission is to check whether the establishment of the Nuclear Decommissioning Authority (NDA) by the UK Government complies with EC Treaty rules requiring that state aid should not distort or threaten to distort competition.

The NDA is due to be established as of 1st April 2005 as a non-departmental public body in charge of managing most of the nuclear liabilities of the public sector.

Assets belonging to British Nuclear Fuels Limited (BNFL) will be transferred to the NDA who will take on financial responsibility for the attached liabilities. NDA will also take financial responsibility for liabilities at the UK’s Atomic Energy Authority (AEA) sites. The NDA will be responsible for managing the decommissioning of these assets.

In this process, BNFL will be split in two parts. The first part, which comprises such assets as the Sellafield Mox Plant or the Magnox nuclear stations, will be transferred to the NDA. The second one, which comprises in particular BNFL’s subsidiary Westinghouse, will continue normal commercial operations in a smaller, possibly renamed company.

The transfer of the first part to the NDA will be done at no cost to BNFL which will continue normal commercial operations, although the transfer will relieve it from nuclear liabilities that it should normally have met under the ‘polluter pays’ principle.

The Commission considers that this advantage provided by the UK Government is likely to be State aid within the meaning of Article 87(1) of the EC Treaty.

State aid is in principle forbidden by the EC Treaty, but it can be authorised by the Commission provided it can be clearly proved that the negative impact of the aid on trading conditions is outweighed by its positive contribution to the fulfilment of other Community objectives.

In view of the complexity and the novelty of the case, as well as the amount of money involved, the Commission decided that an in-depth enquiry would be necessary in order to analyse the balance of the positive and negative aspects of the aid.

The enquiry will allow the Commission to judge whether the contribution of the setting up of the NDA to the achievement of the Euratom Treaty’s objectives outweighs the impact of the aid on the internal market. Until the Commission reaches this final decision, UK authorities will put in place a transitory regime under which state aid will not be provided to BNFL.

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