Identifier
Created
Classification
Origin
09BRUSSELS1355
2009-10-09 06:12:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Brussels
Cable title:  

BELGIUM: ENERGY MINISTER WANTS TO EXTEND OLDEST NUCLEAR

Tags:  ECON ENRG ETRD EINV BE 
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R 090612Z OCT 09
FM AMEMBASSY BRUSSELS
TO SECSTATE WASHDC 9537
DPT OF COMMERCE WASHDC
DEPT OF ENERGY QASHINGTON DC
UNCLAS BRUSSELS 001355 


SENSITIVE

STATE FOR EUR/WE, EQB/ESC/IEC AND EEB/TRA
USDOC FOR 4212/IEP/EUR - JLEVINE

E.O. 12958: N/A
TAGS: ECON ENRG ETRD EINV BE


SUBJECT: BELGIUM: ENERGY MINISTER WANTS TO EXTEND OLDEST NUCLEAR
POWER PLANTS TEN YEARS TO 2025

INTRODUCTION AND SUMMARY
------------------------

UNCLAS BRUSSELS 001355


SENSITIVE

STATE FOR EUR/WE, EQB/ESC/IEC AND EEB/TRA
USDOC FOR 4212/IEP/EUR - JLEVINE

E.O. 12958: N/A
TAGS: ECON ENRG ETRD EINV BE


SUBJECT: BELGIUM: ENERGY MINISTER WANTS TO EXTEND OLDEST NUCLEAR
POWER PLANTS TEN YEARS TO 2025

INTRODUCTION AND SUMMARY
--------------


1. (U) On October 1, Energy and Environment Minister Paul Magnette
(Parti Socialiste) announced that he had agreed with Prime Minister
Herman Van Rompuy to keep the Belgian nuclear power plants open
until 2025. In exchange, the owner of the plants, Electrabel (a
Belgian subsidiary of the French Suez-EDF group) is expected to be
required to pay at least 250 million euros annually to the Belgian
Treasury each of the next 16 years. The Belgian cabinet also wants
reductions in residential electricity rates, but the details of such
a deal still need to be worked out. Electrabel, in turn, wants its
monopoly over electrical power production in Belgium extended. End
introduction and summary.

Existing Law Would Close Some Plants by 2015
--------------


2. (U) In 2003, the Belgian legislature passed a law requiring
Belgium's commercial nuclear power plants to shut down forty years
after their commissioning, which means the three oldest plants would
be closed by 2015 and the four remaining by 2025. The law was
widely considered as the price the Belgian green parties had
demanded in exchange for their participation in the Verhofstadt I
coalition government (1999-2004). The law did, however, contain a
loophole, in that the seven nuclear power plants could be kept open
for a longer period if Belgium's electricity supply from other
sources could not be guaranteed. About 55 percent of Belgium's
electricity supply currently comes from the seven nuclear power
plants.

Political tug of war
--------------


3. (U) The liberal parties on both sides of the linguistic border
(the Flemish Open VLD and the francophone Mouvement Reformateur
(MR)) had always maintained that Belgium could not afford the
closure of the nuclear power plants. They had until now met fierce
resistance from the francophone Socialist Party (PS) to the idea of
using loophole in the law to keep the plants open beyond 2015. When
the Christian-Democratic parties joined the coalition in 2008,
though, the PS found itself more and more isolated. The country's
increasingly dire budget situation -- larger budget deficits due to
the financial crisis, resulting in a higher overall debt/GDP ratio

-- has finally caused the PS to relax its opposition.

Between a hard thing and the budget deficit
--------------


4. (SBU) For 2010, the GOB is looking for some big one-time
measures to reduce the estimated 20 billion euro budget deficit.
One such measure will probably be a substantial contribution by the
Belgian banks, now that they are seen as returning to financial
health. The banks received 15 billion euros in support from the
federal government in 2008. The energy sector is another likely
candidate to contribute to the Belgian Treasury, including the
quasi-monopolist electricity producer, Electrabel. Since Electrabel
has already entirely written off its nuclear power plants, some
experts have estimated the total net windfall profits that the
company would reap during the additional 10 year life of the plants
to be 12 billion euros during the period 2015-2025. Electrabel
would need to invest at least 800 million euros to upgrade the
plants, leaving a substantial expected profit, from which the
Government would like to have a cut.

Expert study provides elegant way out
--------------


5. (U) Energy and Environment Minister Paul Magnette (PS)
commissioned an international study (the so-called Gemix report) in
2008 on Belgium's optimum mix of energy generation/supplies. The
final report has now been published, with the conclusion that
Belgium will have insufficient alternative energy sources by 2015 to
cover the loss of electricity supply from the nuclear power plants
due to close under the 2003 law. Because of these supply problems,
Magnette is now invoking the loophole in the 2003 law to keep the
three oldest plants (Doel I and II, as well as Tihange I) open until

2025. However, the Minister has indicated he will not follow
another recommendation by the international experts to keep the four
newer nuclear power plants open for another 20 years.

Show Me the Money
--------------


6. (SBU) Although it is still unclear exactly how much Electrabel
may be required to pay per year, various sources are suggesting that
it will be a 600 million euro up-front fee, plus at least an annual


fee of 250 million euros thereafter. Magnette also reportedly is
still negotiating with Electrabel for a reduction in household
electricity prices. On the opposite side of the table, the company
is said to be demanding the continuation of its quasi-monopoly in
exchange for the payments being demanded by the GOB.

Comment
--------------


7. (SBU) Apart from the political and related financial/budgetary
tugs of war caused by the need to determine how long to operate
Belgium's commercial nuclear power plants, there are also cost
issues. It will take at least 800 million euros to modernize and
extend the lifetime of the plants. And then there is an operational
issue: if the plants stay open until 2015, they will have been
operating for at least 50 years. According to specialists at
SCK/CEN, a Belgian nuclear research center, this would be an
unprecedented technological experiment.

GUTMAN