Opposition Builds to UK Nuclear Project in EU Executive

A landmark deal to use British taxpayers' money to build a 16 billion pound ($25.6 billion) nuclear power station has triggered opposition from a quarter of EU policy-makers, who want to overturn approval from the top European regulator, EU sources said.

The European Commission, the EU executive, said last month it would approve the British scheme involving French utility EDF , confirming a Reuters report.

A copy of the draft decision seen by Reuters shows the Commission has accepted the plan with some changes that would ensure the British government and British taxpayer would get a bigger share of any windfall profits and EDF a smaller take.

The project at Hinkley Point, southwest England, is central to Britain's goal to replace a fifth of its ageing nuclear power and coal plants over the coming decade, while France sees it as a major export contract that will boost its nuclear industry.

But critics say it breaches EU law over when government funding is allowed, and representatives of the renewable industry have threatened to bring legal action against the Commission if the Hinkley Point plan is approved.

An internal meeting of senior Commission staff on Monday will examine the decision, and the college of 28 Commissioners including PresidentJose Manuel Barroso is expected to hold a closed-door vote on Wednesday.

Five separate sources, speaking on condition of anonymity, said seven Commissioners opposed approval of the Hinkley Point funding, and although that would not be enough to block it, it was an unusually high level of opposition.

One source said the number could rise, because there are still a few days left before the vote, and predicted a delay.

"They should make more effort to accommodate objections," one of the sources said, referring to the department of Competition CommissionerJoaquin Almunia, which has managed the case.

COMPETITION DISTORTIONS 'MINIMUM NECESSARY

A copy of the Commission decision seen by Reuters said any competition distortions were being "kept to the minimum necessary and are offset by the positive effects of the measures".

It shows that Britain would be allowed to offer EDF a guaranteed power price of 92.50 pounds per megawatt-hour for 35 years, more than twice the current market rate.

One source said that under the changes following negotiations with Britain, the high strike price was offset by "a gain-share mechanism" that allows Britain a bigger share of any windfall profits made by EDF from the first cent through the whole life of the plant.

EDF, meanwhile, would be compensated if a new government decided to phase out nuclear power in Britain, the document showed.

The case is a benchmark for EU member states on both sides of the debate as EU countries such as Germany phase out nuclear and seek to replace it with renewable power, while nations such as Poland, like Britain, favour nuclear.

Britain says the funding is essential because the EU carbon market has collapsed to levels far too weak to engineer a shift away from carbon-intensive fuel to carbon-free generation.

Britain classes nuclear as well as renewable power as carbon-free, although opponents of nuclear say it cannot be regarded as an environmental solution because it creates radioactive nuclear waste.

They also say there is no justification for funding an expensive and mature technology, when subsidies are being taken away for renewable energy, which is becoming more and more commercially competitive.

"They are rolling out the red carpet for nuclear and waving a red card for renewables," Claude Turmes, a Luxembourg member of the Green partyin the European Parliament, told Reuters.

European Competition Commissioner Joaquin Almunia is scheduled to leave office at the end of October, and sources said he felt he could not leave the Hinkley Point decision for his successor.

Environmental campaigners say he had no right to leave his successor to tackle the aftermath of a hasty conclusion.

"If the deal is approved, the outgoing Commission will be leavingBrussels in a getaway car after the heist of the century," said Andrea Carta, EU legal adviser to campaign group Greenpeace. "Taxpayers would be left paying for one of the most expensive power stations in the world."

(editing by Jane Baird)

(1 US dollar = 0.6262 British pound)