Deleuze: ‘The government has given Electrabel and EDF an undeserved gift”

  • Olivier Deleuze has performed some calculations: the levy on Tihange 1 will likely be less than the current tax on nuclear revenue.
  • An overly generous deal for the two providers?
  • The energy secretary rejects the accusation.

“The Wathelet plan is a fantastic gift to Electrabel and EDF from a government whose budget is tight,” says Olivier Deleuze, joint president of the Ecolo party. “The ten-year extension given to the Tihange nuclear power station was already a gift. Furthermore, by guaranteeing a minimum price of €41.80 per MWh, the government is handing an undeserved bonus to Electrabel and EDF.”

The Tihange 1 financial terms extension revealed at the beginning of July by the secretary of state for energy, Melchior Wathelet, and approved by the federal government on July 19 are presently under scrutiny.

Let’s recap. The plan foresees that the state will harness the sale of electricity between 2015 and 2025. It will equally remunerate the plant owners, Electrabel and EDF.

The MWh buy-back price has been set at €41.80. The breakdown includes €27.40 to cover production costs, €8 for the staggered repayment of extension investments (€600 million) and €6.40 profit for the operators.

If the price of electricity in the power exchange is lower than the buy-back price, the state will not purchase it. If the price is higher, the additional revenue (70 %) will be shared by the state and the two energy providers (remaining 30 %).

Unconvinced, the Ecolo representative gets out his calculator. “First, I’m surprised that the production costs laid down by the government are as high as €27.40 per MWh. CREG, the Commission for Electricity and Gas Regulation, had put it at €21.40. I agree that we should index that amount. But, at a rate of 2 % per year, I get €23.10, not €27.40.”

As for the repayment of investments required for extending the lifespan of the power plant, Deleuze wants to retain the figure of €8, “even if I didn’t actually find any proper justification for it in Mr. Wathelet’s plan.” The CREG, he points out, had arrived at the figure of €2.12 per MWh as repayment of the extra investments.

But that was before the stress tests, which entailed additional investments.

On the other hand, Deleuze questions the 18 % profit channeled toward the owners of Tihange 1. “In a recent statement the CREG suggested a margin of 12 % for producers installing new off-shore wind farms, but it’s just as risky an investment as operating a nuclear power station that was paid off some time ago,” he explains, stressing that a higher percentage for Tihange 1 is unjustified.

Likewise, Deleuze sees no reason why the additional revenue if the market price exceeds €41.80, could not go entirely to the state.

Then when the secretary of state for energy justifies himself by claiming that “a government has never before taxed nuclear profits as such a high rate.” Ecolo’s joint president shared his calculations with Le Soir, “The tax on nuclear profits is now €550 million per year, €89 million from Tihange 1. Under the new system the levy on Tihange 1 will be null if the electrical market price is lower than €41.80. It would need to increase over €58 for the levy to exceed what the nuclear benefits bring in at the moment.”

But, remarks Deleuze, the MWh delivery price in 2014, 2015 and 2016 today stands at €41.50. “I would like someone to explain to me why such a complex system was invented to simply take a step backwards from where we are now.”

Is the Ecolo politician muddying the waters? A little. The MWh delivery price over one, two and three years is indeed €41.50, but it is still the middle of summer. In winter the price is higher, and, as an expert explained to Le Soir, one needs to look at the average across an entire year which sits at around €52.

Moreover, price fluctuation projections used by the electric sector have put the MWh at approximately €55 in 2016.

The fact remains that the levy should bring in less than the current nuclear benefits. “The government is depriving itself of this money which it could invest sensibly. Why? I’d like that to be explained to me,” concludes Deleuze.

DOMINIQUE BERNS

 

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