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UK Energy Bill Illegal Under Existing EU Rules, Lawyers Claim

Barbara Lewis and Karolin Schaps, Reuters

Britain’s plans to reward nuclear plant operators through fixed prices for low-carbon energy are illegal under existing EU rules and efforts to adapt them are likely to draw opposition from other member states, EU and legal sources said.

Britain plans to reform its electricity market to fix a minimum price for nuclear, wind and solar-generated power, which is carbon free.

The proposals are being assessed by the British parliament but the subsidy instruments, named contracts-for-difference (CfDs), will also require approval from the European Commission, the EU executive, under state aid rules.

“Neither under the current (…) nor under possible future frameworks could the CfD scheme for nuclear generators be declared compatible with European state aid rules,” said Doerte Fouquet, a lawyer specialised in EU law at Becker Buettner Held in Brussels.

The British government is already in talks with France’s EDF about a CfD for the company’s Hinkley point C nuclear project in south-west England, Britain’s first nuclear plant since 1995, which is expected to start operating around the turn of the decade.

The European Commission said it had not yet received a formal notification from Britain, but added that, in general, state aid is only authorised when the benefits of aid outweigh the distortion of competition brought about.

A spokesman for Britain’s Department of Energy and Climate Change said Britain was talking to the EU executive.

“We are working with the European Commission to ensure mechanisms and institutional arrangements within Electricity Market Reform are consistent with EU state aid rules,” he said.

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