TAXPAYERS' £184M AID TO PRIVATE ENERGY FIRM

The Guardian, 18 July 2005

TAXPAYERS' £184M AID TO PRIVATE ENERGY FIRM

Paul Brown, environment correspondent

A subsidy of £184m has been paid by the government to help prop up the newlyrescued British Energy, which had to be bailed out from bankruptcy two yearsago.A letter marked "restricted: commercial and market sensitive", obtained bythe Guardian, shows the government paid £184,812,087 to British Energy onMarch 1 for "spent fuel liabilities". These liabilities are long standingreprocessing contracts with the state-owned British Nuclear Fuels, atSellafield in Cumbria.BNFL is paid to take away used fuel and dissolve it in acid to recover theplutonium and uranium. For the privatised British Energy this is anexpensive and unnecessary process because it has no use for the plutoniumand uranium. BNFL is therefore paid to store it.Because the reprocessing contracts would damage the viability of BritishEnergy, the government has agreed to pick up the bill for this work and thestoring of the waste until the contracts expire in 2086.The subsidy means that most of the costs of dealing with the highlyradioactive and dangerous spent fuel taken out of British Energy's advancedgas-cooled reactors will fall on the taxpayer.The letter from the first secretary for competition and company law atBritain's Brussels embassy was to explain "state aid" to British Energy toHumbert Drabbe, the director general for competition at the Europeancommission. The government undertook to inform the commission of any stateaid after the rescue package for British Energy was agreed in September2004. The package said that the government would pick up the cost of"historic liabilities" incurred by the company before it was privatised in1996.This means the cost of all reprocessing contracts signed in the early 1990sfor thousands of tonnes of spent fuel, much of which is generatingelectricity in the reactors.The £184m payment, or similar amounts, will be repeated every year to paythe costs of British Energy's contracts with BNFL. In effect, the company'sshareholders will be able to get profits from the generation of electricitywithout having to pay the cost of disposing of the fuel afterwards.The payment will appear as operating income from customers in BNFL'saccounts - but it was not revealed in BNFL's annual accounts published lastmonth as a direct payment from the taxpayer via British Energy. Thegovernment's use of taxpayer's money to prop up both British Energy and BNFLmay yet prove embarrassing.The money goes directly to subsidising the Thermal Oxide Reprocessing(Thorp) works at Sellafield, which has been shut down since April because ofa leak. The money is being paid for a service which is suspended and maynever be able to be provided.Mark Johnston, energy campaigner for Friends of the Earth in Brussels, said:"The 'polluter pays' principle has been abandoned and the government hasbegun doling out huge sums, potentially for decades to come. Much of thesecosts could be avoided if the Thorp plant was not reopened. The majority ofnuclear operators around the world do not reprocess their spent fuel,instead opting for storing it, which is less risky, less costly and lesspolluting. We must do the same in Britain, so that payments like this onecan at least be reduced."British Energy said it could not comment on its accounts because its annualresults, which include the payment from the government, are due to bepublished this week.The Department of Trade and Industry which owns BNFL on behalf of thegovernment, agreed it had paid the money to British Energy."The commission is aware that this money will go from British Energy to BNFLto pay for reprocessing contracts, and has approved it," a spokeswoman said.