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EU to probe Slovak nuclear plan

(Brussels, 13 June 2005) The European Commission is to launch an investigation into planned state aid to the Slovak nuclear industry, following a complaint by environmental groups led by Friends of the Earth Europe.

The new probe will be the third occasion in as many years that the EU has had to scrutinize public subsidies towards the huge costs of decommissioning nuclear power plants and managing radioactive waste. It will also be the first-ever time that a case of this kind has begun following an NGO intervention.

The enquiry, led by Competition Commissioner Mrs Neelie Kroes, will centre on a 2004 Slovak government decision effectively to increase the prices paid by ALL electricity users in the country. The scheme should have begun on 1 January 2005, but has been repeatedly delayed. If it eventually goes ahead, then the new levy would be used to fill a hole in a special nuclear decommissioning fund, which currently contains only around 10% of estimated total ‘clean-up’ costs.

By subsidising its nuclear sector, Slovakia would further distort its energy market and so disadvantage other energy options such as renewables and energy efficiency. European law prohibits subsidies in principle. In practice, public aid must be agreed in advance by the European Commission, which in recent times is taking an increasingly tougher line against support for industries that are uncompetitive.

The case is also of interest because the company that operates the reactors, Slovenské Elektrárne (SE), is currently being privatised. Slovakia recently agreed, subject to conditions, to sell 66% of SE to ENEL, the giant Italian utility, for €840M. Decommissioning subsidy is believed to be a key condition of this deal, and so the Commission investigation could mean that the ENEL deal is delayed or has to be renegotiated.

If the subsidy plan is banned or cut back, then this would also damage the financial prospects of a proposal to build two new reactors (‘Units 3 & 4’) at Mochovce. Another privatisation sale condition is that ENEL must present Slovakia with an appraisal of future investments, including potential new nuclear units at Mochovce.

“Slovakia has been caught out” said Mark Johnston, energy campaigner Friends of the Earth Europe.

“It thought it could sneak through its subsidy plan, but instead it must now face EU scrutiny. The new investigation by Mrs Kroes must take a tough line against these blanket subsides, and with her recent statements we think this could be so.

“Propping up dinosaur industries like nuclear has no place in a modern energy market. Reactors owners and their customers are the ones who must meet post-closure costs, not citizens generally.”

“The money missing from the decommissioning fund was caused by mismanagement,” said Peter Mihok, the CEE Bankwatch Network coordinator of Friends of the Earth Slovakia. “By paying too little into the fund in the past, the company made higher profits but the true financial position was misrepresented. Slovak people should not be forced to pay for these mistakes.”

This new case is part of wider campaign by Friends of the Earth calling for a new EU internal market law to outlaw nuclear subsidies, by ensuring it is the responsibility of all nuclear firms to meet fully themselves all their post-closure liabilities.

“This and other recent cases point to a systemic problem,” added Mr Johnston. “We suspect most plans to fund post-closure financial liabilities are faulty. Given member states’ conflicting interests in this area, it is the EU that must lay down common binding rules.”

Contacts:

Brussels: Mark Johnston, FOE-Europe, +32 2 542 6101
Bratislava: Barbora Cernusakova, FOE-Slovakia + 421 2 5542 2101
Bratislava: Palo Siroky, Za Matku Zem (For Mother Earth), +421 903 791 060 mob
Rome: Laura Radiconcni, FOE-Italy, + 39 06 686 8289

Notes:

• Friends of the Earth Europe; Friends of the Earth Slovakia; and For Mother Earth Slovakia filed a complaint to the European Commissioner for Competition, Mrs Neelie Kroes on 31 January 2005. The complaint is available here, and annex 1here.
  The Commission asked Slovakia for its comments on the complaint, which triggered a pledge to submit the subsidy plan to be examined, something which it is thought Slovakia previously had not anticipated having to do. The Commission’s final letter stating this is available here.
  Regarding the letter, although formally the EC’s file on the joint NGO complaint is being closed, it will in effect be replaced by a new file on the substantive case, when this is submitted by Slovakia in the coming months.
  
• The previous cases were British Energy in 2003 (IP/03/1083), decided 23 September 2004 (IP/04/1125), and British Nuclear Fuels plc in 2004 (IP/04/1430), which remains under investigation. The Commission is also investigating a further nuclear state aid complaint, concerning the new Finnish nuclear reactor. Details are available here.
  

Friends of the Earth Europe campaigns for sustainable and fair societies and for the protection of the environment,
unites more than 30 national organisations with thousands of local groups
and is part of the world's largest grassroots environmental network, Friends of the Earth International.

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