First aid or state aid?

摘要

In 2002 electricity wholesale prices fell by around 40% in England and Wales. Whatever the precise causes of the price fall, electricity generators inevitably suffered, none more so than British Energy (BE), the largest UK generator. BE's problems led to a programme of state support, which the European Commission (EC) is currently examining to check for possible state aid. An explanation of BE's woes - and the appraisal of the subsequent state support - both turn on the economics of nuclear power. Many generators were able to effect two partial compensations for the problem of falling prices. First, as retail electricity prices fell much less than wholesale prices, those generators with a substantial retail business suffered much less - retail activities provided a hedge against wholesale price falls. Second, when generation was unprofitable, fossil fuel generators could choose to reduce output, mothball (or even close) expensive stations, and wait for better times.