Utility must pay 2013 nuclear tax, Belgian court rules
Belgium's Constitutional Court has rejected Electrabel's appeal against the legality of the nuclear tax contribution imposed by the government for 2013. The company maintains that the level of tax does not reflect deteriorating market conditions in which it operates.
In 2008, the Belgian government announced that the country's nuclear power plant operators would have to make a one-off payment of €250 million ($338 million). However, in 2009 it said it would postpone its planned nuclear phaseout but would charge nuclear operators an annual tax of €215 to €245 million ($245-280 million) over the period 2010-2014. In 2012, the government passed laws doubling the level of tax.
Belgium's nuclear operators filed a complaint with the Constitutional Court in June 2013 against the nuclear contribution that had been set for 2012. The government had set a total contribution from the nuclear operators of €550 million ($629 million), of which Electrabel had to pay €479 million ($548 million). However, the court rejected the utilities' appeal in July 2014, saying that it was "unfounded." At that time, Electrabel said it would reconsider the future of its nuclear activities in Belgium.
"This confiscatory tax burden on Electrabel, at a time when its financial situation has deteriorated significantly, has led to losses for Electrabel in 2013."
Electrabel
The reactor operators subsequently lodged another appeal with the Constitutional Court for the amount of tax imposed on them for 2013.
The court ruled yesterday that payment of the tax is "legitimate". It also concluded the tax does not constitute illegal state aid, as claimed by the utilities.
Responding to the court ruling, Electrabel said the court "did not take into account the significant decrease of the results out of Belgian nuclear generation". It said the 2013 contribution of €422 million ($482 million) the company must pay, "to which the amount of various taxes due by the company must be added, exceeded the total operating results of all of Electrabel's operating activities in Belgium". It added, "This confiscatory tax burden on Electrabel, at a time when its financial situation has deteriorated significantly, has led to losses for Electrabel in 2013."
At the request of the federal energy minister, the Commission for the Regulation of Electricity and Gas (Commissie voor de Regulering van de Elektriciteit en het Gas, CREG), using its own methodology, assessed the profits that would be derived from nuclear activities in Belgium in 2014. CREG calculated that the profit from all the activities of Belgium's nuclear operators - Electrabel, EDF Luminus and EDF Belgium - totalled some €435 million ($497 million) in 2014. This, Electrabel claims, is one-quarter the amount calculated in 2011. Electrabel earlier noted the nuclear contribution amounted to €479 million ($548 million) in 2014 - some €44 million ($50 million) more than the calculated profits.
The company said, "The study confirms Electrabel's consistent position before the courts, i.e. that the income from its nuclear activities has dropped significantly in recent years due to the drop in market prices and the increase in operating costs of all Belgian power plants."
Agreement for future payments
In July, an agreement in principle was reached between Electrabel and the Belgian government on the conditions for a ten-year life extension for units 1 and 2 of the Doel nuclear power plant. The tax to be paid by the country's nuclear operators was also revised.
Under the agreement, Electrabel must pay an annual fee of €20 million ($23 million) between 2016 and 2025 for the continued operation of the two units. For the operation of the country's other power reactors, the plant operators must pay a lump sum of €200 million ($228 million) in 2015 and €130 million ($148 million) in 2016. This was a compromise to fees of €100 million ($114 million) in 2015 and €20 million ($23 million) in 2016 set by a December 2006 law.
For subsequent years, starting in 2017, the Belgian government will revise the contribution according to a formula that takes into account the evolution of the costs, production volumes and the price of electricity.
Belgium has two operating nuclear power stations - Doel and Tihange - with a total of seven reactors, which between them produce over half the country's electricity. Engie operates all seven units through its Electrabel subsidiary. This owns three of the units outright as well as 89.8% of another three (the remaining 10.2% being held by SPE). Electrabel jointly owns the remaining unit with France's EDF. So, although a levy against nuclear producers hits all three companies, Electrabel bears the brunt of the charge.
Researched and written
by World Nuclear News
