The commission must rule on whether the guarantees – contracts for differences (cfds) that would mean payments to nuclear plants to make up any shortfall if electricity prices fall below an agreed strike price – breach European Union (EU) rules banning state aid.
“We will put our formal submission in in the next few months,” Tim Abraham, head of EU policy in the UK’s Department of Energy and Climate Change (Decc) told Utility Week. He conceded that the commission was not certain to reach a decision quickly.
Decc nevertheless plans to submit the required legislation to parliament in May, to allow passage of the legislation in 2013 and first cfds in 2014.
Decc wants to set a minimum electricity price to give developers the ability to assure investors of long-term profits, to allow nuclear plants to be built. “I hope we can do it this year,” said Abraham. The aim is to ensure that the UK meets greenhouse gas emission targets and has security of energy supply.
Abraham told a meeting of the Brussels-based think-tank Bruegel, to discuss UK energy market developments, that Decc has yet to decide the length of proposed cfds. Observers have suggested that contracts could run for as long as 30 years, although the longer the period the less likely commission approval.
By Vic Wyman