European Commission bombards Belgian government with questions on nuclear deal with GDF Suez

On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants (Doel I, Doel II and Tihange I) with 10 years. This would mean that all Belgian nuclear plants will close between 2022 and 2025.

As a favour in return, GDF Suez and Electrabel (hereinafter 'GDF Suez') would have agreed to pay between 215 and 245 M EUR per annum (until 2014). GDF Suez will also invest in R&D on CCS and nuclear waste, in renewable energy and in energy efficiency.

At the same time, a 'Follow Up Committee' will be installed. This Committee will be composed out of representatives of the nuclear producers, the government and the social partners, and of representatives of the National Bank of Belgium. The main tasks of this Committee will be to yearly evaluate the production costs of nuclear energy and to evaluate the electricity market prices. It will also have to verify that the household prices of all suppliers will in no way be higher than the average of the prices in the neighboring countries.

During a meeting in March 2010 between DG Energy's representatives and the cabinet of the Belgian minister of energy, DG Energy handed a long list of questions on the agreement between GDF Suez and the Belgian state. Amongst a lot of others, following questions appear to have been asked: Did the Belgian government contact other energy market participants? On which basis the contribution of 215 to 245 M EUR per annum was calculated? Is there a link with the profits of GDF Suez as a result of the postponement? Did the Belgian government calculate the value for GDF Suez of such a postponement? What were the results of such calculation and the eventual studies on which it was based?

The Belgian government must respond by 8 April 2010.

European Commission bombards Belgian government with questions on nuclear deal with GDF Suez

Postponement of the nuclear phase out

On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants with 10 years. This would mean that in the soon to be adopted new regulatory framework all Belgian nuclear plants will close between 2022 and 2025.

As a favour in return, GDF Suez and Electrabel would have agreed to pay 170 M EUR per annum from 2010 until 2014. The other nuclear market participants (EDF Belgium, SPE and eventually E.ON) will have to pay the remaining 45 to 75 M EUR per annum (until 2014). GDF Suez will also invest in R&D on CCS and nuclear waste, in renewable energy and in energy efficiency.

At the same time, a 'Follow Up Committee' will be installed. This Committee will be composed out of representatives of the nuclear producers, the government and the social partners, and of representatives of the National Bank of Belgium. The main tasks of this Committee will be to yearly evaluate the production costs of nuclear energy and to evaluate the electricity market prices. It will also have to verify that the household prices of all suppliers will in no way be higher than the average of the prices in the neighbouring countries.

The decisions still must be transposed into formal legislation. Nevertheless, some ideas can raise concerns about the development of a liberalised energy market in Belgium and about the position of other market players (will they contemplate building new power plants? will they be able to raise their market share?). From a legal point of view, it remains to be seen whether this decision to postpone the nuclear phase out will stand the test of EU law and of Belgian constitutional law.

In any case, interesting regulatory and legal times lay ahead.

A free English translation of the relevant excerpt from the governmental declaration will be send to you at first request. Please e-mail me.

Postponement of the nuclear phase out

Pax Electrica II Agreement between Electrabel and SPE

In the framework of the “Pax Electrica II”, Electrabel and SPE reached an agreement in principle on the conditions for the putting at the disposal of SPE of 635 MW nuclear capacity of Electrabel. The first 100 MW consists of a swap with Chooz. The next 250 MW will be sold to SPE. The last 285 MW will be object of a long term supply contract “until 2025 at the earliest”. The agreement will be submitted for approval to the Belgian and European competition authorities and must be fully implemented by the end of the Summer 2008.

It is curious to note that this agreement in principle implicitely neglects the fact that the Act of 2003 on the nuclear phase-out foresees that the last nuclear reactors (Doel 4 and Tihange 3) will have to be shut down in 2025. By stating "until 2025 at the earliest", SPE, Electrabel and Verhofstadt, the Belgian prime minister present at the signing of the agreement, confirm that the nuclear phase out will without any doubt be reviewed by the next governement.

Pax Electrica II Agreement between Electrabel and SPE

Pax Electrica Ter?

During the "big debate" in view of the federal elections next Sunday 10 June 2007, prime minister Verhofstadt said that he is convinced, based upon his discussions with the French president Sarkozy and the French prime minister Fillon, that the merger between Suez and Gaz de France will not take place.

Nevertheless, Verhofstadt is of the opinion that even in the event the merger would not succeede, the Belgian government should enter into discussions with Suez in order to agree upon a new Pax Electrica, aimed at the release of 30% of Electrabel's production capacity in Belgium to two other players. Strangely enough, it still appears that one of the two potential candidates is already known: the Belgian company SPE.

Pax Electrica Ter?