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New Czech PM won't back price supports for nuke expansion

Feb. 10, 2014 at 12:05 AM   |   Comments

PRAGUE, Czech Republic, Feb. 10 (UPI) -- Czech Prime Minister Bohuslav Sobotka says he won't back price supports for an expansion of the Temelin nuclear power plant, casting doubt on the plans.

Sobotka, whose left-leaning Social Democrat-led government was sworn into office Jan. 29, told a Parliamentary hearing Thursday he is opposed to guaranteeing the purchase price of electricity generated at the expanded plant by utility CEZ, Czech Radio reported.

CEZ issued a tender under the previous center-right government of Prime Minister Petr Necas to add two new reactors at Temelin as part of a $15 billion upgrade, saying the price guarantees were necessary to make the expansion economically feasible.

The tender, however, is being scrutinized by the European Commission as a possible violation of antitrust law after the French company Areva appealed CEZ's decision to exclude it, leaving Westinghouse of the United States and a consortium including Russia's Atomstroyexport as the remaining bidders.

Brussels is generally skeptical of government price supports for nuclear power projects and is probing a similar deal granted to the French company EDF by the British government for a new plant at Hinkley Point.

"The new government is not willing to provide guarantees for the purchase of electricity prices, which could in the next few decades dramatically burden homes and businesses with increased payments due to the need to finance the completion of the power plant," Sobotka said during questioning in Parliament.

The premier said the new cabinet is still considering whether to scrap the existing tender, further fueling doubt the expansion will happen at all. He indicated the government will include the discussions of the Temelin tender situation this week as it reviews its stance on the EU's climate package and the country's overall energy policy.

The announcement came two weeks after Sobotka told Radio Prague he wasn't interested in following the British model of "contracts for difference" at the Hinkley Point project, saying it would put too big a burden on Czech electricity consumers.

With electricity prices falling in recent years due to lower European demand and EU obligations to use electricity from renewable sources, CEZ has voiced concerns the project might not make economic sense.

The cost of electricity generated at Temelin after the expansion would likely be about double the current wholesale price with either taxpayers or consumers being counted on to make up the difference.

The uncertainty has led CEZ to put off the expansion plans until mid-2015.

CEZ General Director Daniel Benes said earlier the company won't sign a contract for the completion of Temelin until the state agrees to a guaranteed purchase price for electricity or institutes some other type of subsidy scheme.

He told the daily newspaper Lidove Noviny low prices are not necessarily a condition for the completion of the plant and negotiations with bidders are continuing.

Michal Snobr, an energy analyst at the Czech investment firm J&T Banka, told the Prague Post he didn't believe it's possible to continue with the old Temelin tender.

"The government and the management of CEZ, they only want to find a way to stop this tender, because it's not right, it's not time to continue right now," he said. "My opinion is that to stop this tender is the only way to save some chance of developing a nuclear power station in the Czech Republic in future, because if CEZ continues with the tender, there's a big risk the European Commission will cancel everything."

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