EDF, the French state-controlled utility, won an important round in its long fight to take over Scottish-based British Energy after the European Commission yesterday cleared the £12.5bn take-over of Britain's main nuclear power operator.
EDF, the French state-controlled utility, won an important round in its long fight to take over Scottish-based British Energy after the European Commission yesterday cleared the £12.5bn take-over of Britain's main nuclear power operator.
The commission, the executive arm of the European Union, gave the deal the green light after EDF agreed to sell two power stations and make a site available to a competitor to build one of the UK's planned third-generation atomic power stations.
Its decision, which removed any threat of a prolonged investigation into the deal on competition grounds, paves the way for the government to accelerate its plan for a new generation of nuclear power stations.
Under the revised terms imposed by Brussels, Electricité de France has agreed to sell its own generating plant at Sutton Bridge in Lincolnshire and British Energy's only coal-fired plant at Eggborough, East Yorkshire. It has also committed to selling minimum volumes of electricity in the British wholesale market.
The French group, which has embarked on an aggressive expansion strategy in the United States, Italy and South Africa as well as the UK, has also agreed to dispose of a site for building a new nuclear plant at either Dungeness, Kent, or Heysham in Lancashire.
The choice of this site will be left to the buyer, possibly Centrica, owner of Scottish Gas, or one of the two big German utilities, E.ON or RWE. All operate in the UK energy market and want to join the nuclear expansion programme.
EDF has also agreed to end a connection agreement with the National Grid.
The commission said that the merger, as initially notified, would have raised serious competition concerns even though the merged group would not have had extremely high market shares in generation, distribution and supply.
It said the combination of the two companies' activities could have made it easier for the group to withdraw power supplies in order to increase prices. The merged group could have used power internally rather than have sold it to the overall market, thereby reducing liquidity.
With a limited number of sites available for new nuclear power plants, most of them owned by East Kilbride-based British Energy, the group would have enjoyed a "high concentration" of ownership of suitable sites.
EDF tabled its offer for British Energy in September in a deal that will net the government more than £4bn for its 36% stake. The French power generator has pledged to build four reactors in the UK with the potential to generate electricity to meet more than 13% of the UK's forecast energy demand by the early 2020s.
Mike O'Brien, minister at the Department of Energy and Climate Change, said: "The sale of British Energy will pave the way for a new generation of nuclear power stations in the UK and we look forward to it completing shortly."
British Energy employs 6000 people and has eight nuclear power stations at Dungeness B in Kent, Hartlepool, Heysham 1 and 2 in Lancashire, Hinkley Point B in Somerset, Hunterston B in Ayrshire, Sizewell B in Suffolk and Torness in East Lothian.
EDF is the world's biggest operator of nuclear facilities. Its 58 reactors in France supply 80% of the country's electricity.
Shares in EDF lost 80 cents to 40.84 in Paris while British Energy sparked up 1.5p to 771p in London dealing.
