British Energy bailout illegal - Greenpeace
Date: 20-Sep-02
Country: UK
Author: F. Brinley Bruton
Unable to sell its electricity at a profit and tottering at
the edge of insolvency, British Energy last week persuaded
the government to issue it a 410-million pound ($638
million) emergency loan that runs until September 27 while
its future is hashed out.
The move by global environmental campaigner Greenpeace came
as government advisers picked through accounts at the
cash-starved utility to decide whether it would cost less to
allow British Energy go under or extend it more help once
the current emergency loan ran out.
This loan most likely violated European Union rules,
Greenpeace said in a letter to Patricia Hewitt, Britain's
Secretary of State for Trade and Industry.
"We see this as unfair support to a polluting industry,"
Greenpeace spokesman Rick Le Coyte told Reuters.
The Commission has confirmed that all state aid must be
approved before being given, Greenpeace said, adding: "This
aid has not been approved."
EU Competition Commissioner Mario Monti said last week that
Britain had formally asked the Commission to approve the
410-million pound package on September 10. The Commission
had yet to decide whether it abided by the rules for rescue
aid, Monti said.
Monti noted that the loan would be for a very limited time
period "during which the future can be assessed and longer
term restructuring measures can be devised".
The Department of Trade and Industry insisted that it had
followed the proper procedures.
"The point is that we notified (the Commission) straight
away and ... were within Commission guidelines", a spokesman
said.
POWER OUTAGE
Greenpeace's move was just the latest problem to dog British
Energy, which has seen its stock plummet by about 90 percent
in recent weeks and its bonds sag on renewed fears that the
producer of about a quarter of the UK's energy is on the
brink of collapse.
Its shares were trading at 4.75 pence on Thursday afternoon.
Shares have lost about 90 percent of their value since
September 6. The firm is now valued at about 34 million
pounds.
The government loan sparked an outcry from environmental
groups, many of which see nuclear power as dangerous and
polluting, and a debate as to whether the government should
bail-out unprofitable private-sector companies.
Last year, the government pulled the plug on Britain's
privatised railway network, Railtrack, tired of its constant
demand for state cash, and handed control of the company to
a state-backed firm.
British Energy's plight has spurred questions about the
viability of privatised nuclear energy companies.
Analysts say breakeven levels for the company's nuclear
power production is about 19 pounds per megawatt hour. UK
prices have hovered around 16 pounds in the last two months.
The government should phase out nuclear power quickly and
boost investment in renewable power and energy efficient
measures, SERA, an environmental group with links to the
ruling Labour Party, said on Wednesday.
Not everyone agrees that nuclear power has no future.
Dieter Helm, an economics professor at Oxford University
with government influence, called on the government to force
consumers to buy nuclear power to save British Energy and
protect the struggling nuclear industry.
To add to its problems, British Energy announced on Thursday
that its Heysham 2 nuclear plant in northwest England was
running at half capacity after it took offline one of the
station's two reactors.
The stoppage, which resulted from a "minor electrical
fault", represented about 1.5 percent of the nation's power,
according to a British Energy spokesman.
He declined to say when British Energy expected the
generator to be running at full capacity again.
