Belgian watchdog rebuffs criticism of nuclear profits calculation
London (Platts)--1Mar2011/645 am EST/1145 GMT
Belgium's energy regulator Tuesday rebuffed Electrabel's criticism of its
method for calculating profits from nuclear power plants, detailing why it
projects profits at three times the level Electrabel does.
Electrabel, a GDF Suez company, is Belgium's dominant nuclear power
generator, and the Belgian government signed a deal in October 2009 charging
nuclear operators around Eur215-245 million ($298-339 million) a year to run
the plants. In return, plant lifespans were extended.
The tax was set using figures from the National Bank of Belgium. At the
instructions of energy minister Paul Magnette, the CREG has since used its
access to information in the power sector to work out nuclear generators'
Using 2007 data, the CREG puts these profits at around Eur2 billion a
year, while Electrabel, which controls almost all production, has said nuclear
margins were more like Eur652 million.
Sophie Dutordoir, CEO of Electrabel, told parliament last month she
"categorically contested" the assumptions CREG used to work out nuclear
profits. The regulator gave a detailed response Tuesday.
CREG estimated the costs of nuclear production between Eur17/MWh and
Eur21/MWh, using 2007 levels. Electrabel added a further Eur2.7/MWh to this
for "general costs," but CREG's workings already included all costs associated
with nuclear production, the regulator said.
Also, Electrabel added a further Eur5/MWh to costs, corresponding to the
capacity of other types of generation required when the nuclear plants weren't
CREG criticized this in its statement, saying its calculations were based
upon the volume of power produced by nuclear plants alone -- some 46 TWh.
On the revenue side, Electrabel assumed that all the nuclear power was
sold to industrial customers (on average, at prices lower than the wholesale
level of Eur60/MWh) but the nature of the power grid and wholesale market
means this is not a fair assumption, the regulator said.
"The laws of physics are such that one cannot say that the electricity
produced by a certain power plant and injected into the grid will be consumed
by a certain client," CREG said.
Wholesale market prices act as a reference point for negotiations with
large clients, the regulator added.
CREG also disputed the price Electrabel gave for power sold to large
users, at around Eur44.8/MWh, saying it was more like Eur48.4/MWh.
The company also underestimated the price for power sold to smaller
customers, the regulator said. The higher prices for residential and small
business customers put the average price sold to Belgian customers at
Eur67/MWh, the regulator said.
Using wholesale market prices of Eur60/MWh, nuclear profits were between
Eur1.75 billion and Eur1.95 billion, it said. Using CREG's calculated customer
price, profits came to between Eur2 billion and Eur3 billion.
Electrabel's calculations determine a much lower profit of Eur750
million, including the profits generated by Belgium's other nuclear operator,
While the government was keen to get the regulator's opinion on nuclear
profits, it has not, as yet, asked the CREG to give its opinion on what level
the nuclear tax should be.
In the last installment of the levy, parliament passed a bill in late
2010 charging nuclear operators Eur250 million for 2010.
--Robin Sayles, email@example.com
Similar stories appear in Nucleonics Week.
See more information at http://bit.ly/NucleonicsWeek