COMMISSION DECISION
of 22 September 2004
on the State aid which the United Kingdom is planning to implement for British Energy plc
(notified under document number C(2004)3474)
(Only the English text is authentic)
(Text with EEA relevance)
(2005/407/EC)
I. PROCEDURE
II. DETAILED DESCRIPTION OF THE AID
1. Beneficiary of the aid
(a) The British Energy plc group
(b) The recent developments
2. The restructuring plan
(a) Origin of BE’s difficulties
(b) The restructuring measures
— Assumption of responsibility for BE’s liabilities under historic spent fuel contracts
— Undertaking to cover any shortfall in NLF funding for stage 1 decommissioning liabilities and uncontracted liabilities
— Undertaking to cover shortfall in NLF funding for stage 2 and 3 decommissioning liabilities
— Specific tax disregard
(GBP million) |
||||
|
Original submission |
Current projections |
||
NPV (discounted at 5,4 % nominal(7)) |
Total future cash payments (undiscounted) |
NPV (discounted at 5,4 % nominal(7)) |
Total future cash payments (undiscounted) |
|
Undertaking for Historic Spent Fuel Contracts |
2 185 |
3 218 |
2 377 |
3 067 |
Undertaking for uncontracted liabilities |
750 |
3 166 |
951 |
3 375 |
Undertaking for decommissioning liabilities |
879 |
4 917 |
1 115 |
5 062 |
Amounts contributed by BE to NLF |
– 1 432 |
– 1 845 |
– 2 007 |
– 2 510 |
Net amounts payable by Secretary of State |
197 |
6 238 |
59 |
5 927 |
Tax disregard |
916 |
946 |
1 047 |
1 077 |
Total |
3 298 |
10 402 |
3 483 |
10 071 |
Original submission: Cash flow valued as of March 2003, In December 2002 prices. Current projections: Cash flow valued as of March 2004, in March 2004 prices. |
(GBP million) |
|||||||
Computation of fuel supply savings |
|||||||
Year to 31 March |
2004 |
2005 |
2006 |
2007 |
2008 |
||
Pre-restructuring costs |
|||||||
|
221 |
247 |
232 |
203 |
213 |
||
|
216 |
241 |
227 |
198 |
208 |
||
Post restructuring costs |
|||||||
|
206 |
231 |
218 |
188 |
201 |
||
|
207 |
231 |
227 |
198 |
207 |
||
|
200 |
220 |
205 |
176 |
186 |
||
Savings |
|||||||
|
15 |
16 |
14 |
15 |
12 |
||
|
14 |
16 |
5 |
5 |
6 |
||
|
16 |
21 |
22 |
22 |
22 |
(GBP million) |
||||
|
NPV |
Undiscounted total payments |
||
Pre-restructuring |
||||
|
592 |
1 117 |
||
Post restructuring |
||||
|
418 |
558 |
||
|
881 |
1 204 |
||
|
3 |
4 |
||
Savings |
||||
|
174 |
559 |
||
|
– 289 |
– 87 |
||
|
589 |
1 113 |
(GBP million) |
|||
|
|
Year ending March 2003 |
Year ending March 2004 |
BNFL |
|
132 |
265 |
Bondholders |
|
110 |
0 |
Eggborough banks |
|
47 |
40 |
TPL |
|
13 |
33 |
TFE |
|
3 |
14 |
Enron |
|
4 |
19 |
VAT impact |
|
0 |
– 8 |
Interest impact |
|
– 9 |
– 21 |
Standstill impact |
|
300 |
342 |
Cumulative cash |
|
300 |
642 |
(c) Financial implications of the restructuring package
(GBP million) |
||||||
Relisting case/Bank case |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
Liquidity reserve |
[…](14) |
|||||
Impact of seasonality and receivables facility |
||||||
Headroom post seasonibility |
||||||
Cumulative impact of cash, output and collateral vulnerabilities(13) |
||||||
Headroom post vulnerabilities |
||||||
Cumulative impact of management actions on cash and collaterals |
||||||
Headroom post management actions |
||||||
RWC/Downside Case |
||||||
Liquidity Reserve |
||||||
Impact of seasonality and receivables facility |
||||||
Headroom post seasonality |
||||||
Cumulative impact of management actions on cash and collateral |
||||||
Headroom post vulnerabilities |
||||||
Cumulative impact of management actions on cash and collateral |
||||||
Headroom post management actions |
|
5-year forecast period |
||||
Profit and loss account |
2005 |
2006 |
2007 |
2008 |
2009 |
Nuclear output TWh |
[…] |
||||
Income |
|||||
Generation sales |
|||||
Miscellaneous sales |
|||||
Total income |
|||||
Operating costs |
|||||
Fuel costs |
|||||
Staff costs |
|||||
Materials and services |
|||||
Capital expensed to P/L |
|||||
Depreciation and amortisation |
|||||
Total operating costs |
|||||
Operating profit/(loss) |
|||||
Contributions from new business activities (PBIT): |
|||||
AmerGen (before revalorisation) |
|||||
Profit before finance charges and tax |
|||||
Finance charges |
|||||
Revalorisation (net) |
|||||
Net interest and other finance charges |
|||||
Total finance charges |
|||||
Profit before tax |
17 |
171 |
186 |
336 |
355 |
Minority interests (share of PBT) |
0 |
0 |
0 |
0 |
0 |
Profit before tax (and HMG indemnity) |
17 |
171 |
186 |
336 |
355 |
Movement in HMG indemnity |
0 |
– 96 |
– 133 |
– 206 |
– 156 |
Profit before tax (and exceptionals) |
17 |
75 |
53 |
130 |
199 |
Exceptionals |
4 068 |
0 |
0 |
– 40 |
0 |
Profit before tax (post exceptionals) |
4 085 |
75 |
53 |
90 |
199 |
Tax |
0 |
0 |
0 |
– 26 |
– 87 |
Profit after tax and exceptionals (before tax on exceptionals) |
4 085 |
75 |
53 |
64 |
112 |
Source: BE. Note: The figures for 2004/2005 have been prepared on a pro-forma basis (i.e. to make comparability easier, for accounting purposes the fuel costs and revalorisation numbers reflect the new fuel contracts, even though technically these will not be in place until the restructuring effective date). |
3. Grounds for initiating the proceedings
III. COMMENTS FROM INTERESTED PARTIES
IV. COMMENTS FROM THE UNITED KINGDOM ON THE INITIATION OF PROCEEDINGS
V. COMMENTS FROM THE UNITED KINGDOM ON COMMENTS FROM INTERESTED PARTIES
VI. ASSESSMENT
1. Euratom Treaty
2. Aid in the sense of Article 87(1) of the EC Treaty
(a) On the existence of aid in Measure G
(b) On the existence of aid in Measures B and C
Outturn electricity price(38) in GBP/MWh real 2003 terms |
Unit amount of (rebate)/surcharge in GBP/MWh real 2003 terms (in comparison with the original contracts) |
Net unit amount of spent fuel payment in GBP/MWh real 2003 Terms |
Payment in GBP/kgU(37) |
14,8 and below |
– 0,6 |
[…] |
|
15 |
– 0,5 |
||
16 |
0 |
||
17 |
0,5 |
||
18 |
1 |
||
19 |
1,5 |
||
20 |
1,75 |
||
21 and above |
2,0 |
3. Compatibility assessment under the EC Treaty
(a) On the restoration of BE’s viability
|
UK authorities’ hypothesis for output |
Powergen’s hypothesis for output |
UK authorities’ hypothesis for costs |
[…] |
[…] |
Powergen’s hypothesis for costs. |
[…] |
GBP 16,4/MWh |
|
UK authorities’ hypothesis for output |
Powergen’s hypothesis for output |
UK authorities’ hypothesis for costs |
[…] |
[…] |
Powergen’s hypothesis for costs. |
[…] |
GBP 16,8/MWh |
(b) On the question whether the aid is restricted to the minimum necessary
(c) On the avoidance of undue distortion of competition
(i) The relevant market
(ii) Capacity situation on the market
Scenario |
2004/05 |
2005/06 |
2006/07 |
2007/08 |
2008/09 |
2009/10 |
2010/11 |
SYS background |
22 |
21 |
23,1 |
26,8 |
24,5 |
25,6 |
22,5 |
Consents background |
22 |
21,1 |
22,8 |
24,3 |
21,6 |
22,5 |
19,1 |
Existing and under construction background |
22 |
21,1 |
18,7 |
17,1 |
14,5 |
12,8 |
9,5 |
Note: Capacity margin is over ACS peak demand. Interconnectors with France and Scotland are assumed to be fully used for import. |
Capacity connected to Scottish Power’s network |
7 127 |
Capacity connected to Scottish and Southern Electricity’s network |
2 844 |
Capacity connected to NGTransco’s network, excluding interconnectors |
63 998 |
Ireland/Scotland interconnector capacity |
500 |
France/England interconnector capacity |
2 000 |
Available capacity in Great Britain |
76 469 |
Maximum demand in Scottish Power’s zone |
4 269 |
Maximum demand in Scottish and Southern Electricity’s zone |
1 684 |
ACS peak demand in NGTransco’s zone |
55 900 |
Aggregate peak demand(67) |
61 853 |