Centrica Says British Nuclear Subsidy Plans Illegal -Report
05/27/2012| 08:59am US/Eastern
U.K. energy supplier Centrica PLC (>> Centrica PLC) has warned U.K. ministers that Britain's plans to subsidize the construction of new nuclear power plants is illegal, The Sunday Times reports without citing sources.
Centrica, a partner in the consortium that aims to build new British nuclear power plants, has told U.K. ministers that proposed "letters of comfort" which the government proposed last week would break rules on state aid, the newspaper said.
Centrica wasn't immediately available to comment.
The letters, in which the government will promise to pay a guaranteed price for power, were a key part of last week's energy bill, the newspaper added. Ministers hoped the pledges - mean't to tide industry over until a fullblown subsidy regime starts in 2014 - would allow the consortium that includes EDF Energy, a unit of Electricite de France SA (>> EDF) and Centrica to start work on time, the paper added.
Insiders now think Centrica could pull out, the paper said. Germany's E.ON AG (>> E.ON AG), RWE AG (>> RWE AG) and U.K. utility SSE PLC (>> SSE PLC) have already withdrawn.
The government has drafted in Slaughter and May, the law firm, to reassure the industry that the offer is lawful, the newspaper added.
Web Site: www.timesonline.co.uk
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; firstname.lastname@example.org