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Topic Title: European Commission Report attacking Hinkley Point subsidy deal
Topic Summary: Think Hinkley Point C subsidies are a done deal...Then think again
Created On: 01 February 2014 01:16 AM
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 01 February 2014 01:16 AM
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Joined: 05 September 2004

Emily Gosden, Energy Editor of the Telegraph...

Nuclear setback as EC attacks Hinkley Point subsidy deal

"Britain's hopes of a nuclear energy renaissance were thrown into fresh doubt on Friday as the European Commission published a damning 70-page critique arguing that a landmark subsidy deal for the first new plant may constitute illegal state aid."

The European Commission report is here...

It is all about whether DECC's Energy Act will distort competition and trade in Energy both, inside the UK and, between the UK and the rest of Europe.

On just one aspect picked at random...the knock-on effect of the new subsidy regime on existing and future electricity trade between us and continental Europe the commission says...

"(395) Aid to [NNB Generation Company Limited] NNBG is also likely to displace the exchange of large quantities of electricity between the UK and its neighbours, i.e. through the interconnectors which are in place. Aid to NNBG might also change the incentive framework which might lead to more investment in interconnection in the future.

(396) While the UK considers, in its notification, the future increase in capacity due to the construction of new interconnectors, it is unclear to what extent such plans might already internalise some of the incentives built into the EMR, including support to nuclear energy. It is also unclear to what extent the provision of capacity through interconnection which is beyond the forecast period provided by the UK, and which might take decades after the construction of the HPC plant, might be affected by the existence of the plant itself.

(397) It would therefore appear that aid to NNBG might have the potential to result in foreclosure of new capacity, provided either by new entrants, or by new investments in interconnection, part of which might be crowded out due to HPC's operations."

Secondary legislation has to be put before parliament in a mature form, because it cannot be amended by MP's and Lords. It was never meant to be used to enact such complex controversial legislation.

Given the extensive and detailed nature of the concerns set out by the European Commission, DECC's secretive subsidy scheme will remain in limbo until the European Commission produces its final report on the matter at around the time of the next general election.

I could not find any reference to DECC plans to exempt energy intensive industries from paying the Hinkley Point C subsidies (by putting them on Energy Welfare). Therefore this report (even on cursory examination) is by no means lists all concerns about the distortive effects of the Hinklley Point C subsidy deal on the UK and other European economies.

James Arathoon

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