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 
------------------------ 
 
¶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