Nuclear a pawn in Belgian politics

Wednesday, 16 November 2011

In pursuit of a functioning government Belgium has reversed a 2009 agreement and proposed a crippling tax on nuclear power, leading utilities to threaten court action. 

 

GDF Suez reacted strongly to the moves today with the assertion that the last negotiated nuclear agreement with government was binding on both sides. The company said it had kept its side of the bargain and would contest the new coalition's proposals using "all legal means at its disposal."

 

Belgium has followed two recent trends in nuclear policy

Phase change Recent years saw the nuclear industry celebrate changes of fortune in several European 'phase out' countries: Italy, Germany, Sweden, Belgium and the Netherlands. However, political resolve has proven to be too weak to cope with the Fukushima accident in three of those, leaving the Netherlands and Sweden holding the only robust 'phase back' policies.    While Italy's embattled former prime minister Silvio Berlusconi lost a referendum on returning to nuclear generation, both the Belgian and German nuclear 'phase out' policies have returned from relaxation in a sharpened form - entirely due to political maneuvering and with no reference to any safety issues.    France's longstanding commitment to nuclear energy could also now come into doubt, after the Socialist party teamed with the Green party for the 2012 presidential election. Green support was secured in part by a promise for early closure of 24 of the country's 58 reactors.

It was only in October 2009 that the country added ten years to the schedule of a 2003 'phase-out', giving reactors a nominal lifespan of 50 years - about equal to the engineering and economic lifespan they expect under normal political arrangements. With the revertion to the 2003 timeline, GDF Suez's subsidiary Electrabel will not be able to relicense two reactors at Doel and another at Tihange to operate beyond 2014 and 2015.

 

Electrabel had already begun an investment program of "almost €1 billion ($1.3 billion)" for those reactors, but that money might now go towards securing other energy supplies, said the company, as it went about explaining the ramifications of the new policy to employees, contractors and customers. It also noted with confusion that successive governments pressed for the opening of investment in Doel and Tihange to other power companies, specifically EDF and EOn.

 

EDF has rights to 8% of Electrabel's power production as well as a 63.5% stake in another Belgian power company, SPE-Luminus, which has rights to another 15%.

 

For several years the Belgian nuclear industry has been required to pay a special tax, but the size of this is set to grow from €215-245 million ($290-331 million) annually to some €550 million ($743 million).

 

This compares to Electrabel's nuclear power revenues in the range €808-€950 million ($1.0-1.2 billion) from 2007, as officially reported to the government in April, and clearly raises questions over the economics of continued operation.

 

The tax policy has emerged from discussions between six parties intended to form a coalition cabinet following a record 353-day post-election period during which the country had no government.

 

Participating in the coalition is the Groen! party, which said it was "totally unacceptable" that the nuclear tax had not been set at €1.2 billion ($1.6 billion) per year with the money sent directly to subsidise renewable development.

 

GDF Suez said the tax is set at twice the relative cost of Germany's tax on nuclear fuel. This had been designed to remove half of the profit from longer operation and is payable for fuel loaded into a reactor, rather than as a fixed annual levy. However, Germany's nuclear tax is now coming under legal assault by the country's four nuclear utilities and has been declared doubtful in terms of the constitution and EU law by a tax court. The German government has nevertheless held its course so far.

 

GDF Suez's conclusion     The prevailing economic situation makes it more crucial than ever that companies should be able to plan their activities within a sufficiently stable and predictable legal and regulatory framework. This is especially true for sectors like energy, which by their very nature necessitate huge investments that take decades to generate a return.   By calling into question decisions that were adopted just two years ago and reached after lengthy negotiations based on detailed, in-depth studies, the Belgian federal government is sending out a particularly negative signal to current and potential investors.

 

Researched and written

by World Nuclear News