4 November 2002 – European Competition Commissioner Mario Monti has told the UK government that the loan given to bail out ailing nuclear generator British Energy constituted unlawful aid.

The Department of Trade and Industry has reacted by admitting that no prior permission from the Commission was sought prior to the loan being granted but insisted that the action “was in full compliance with state aid rules. “

The DTI also confirmed it had received a formal complaint from Cameco, British Energy’s partner in Bruce Power, a Canadian nuclear energy provider. British Energy’s interests in Bruce Power was offered as part-security for the government loan. Cameco claim that they were not properly consulted over the move which has brought into question the financial position of Bruce Power and as a consequence, its operating licence.

A spokesman for British Energy said that it was able to provide sufficient financial guarantees to renew the North American operating licence.

Environmental group Greenpeace has initiated a legal challenge to the loan seeking a judicial review of the government’s decision. A hearing is exp3ected in mid to late November.

British Energy, producer of more than one fifth of the UK’s power, won the bailout from the government in September when it said it would otherwise become insolvent.

Electricity market liberalisation reforms in the UK that exposed industry over-capacity have sent electricity prices down below British Energy’s cost of production.