
Article 1 
The aid which the United Kingdom is planning to implement under Measure A of the restructuring plan for British Energy plc (‘British Energy’) notified to the Commission on 7 March 2003, which consists in the undertaking by the United Kingdom Government to fund:

((a)) The payment of liabilities related to the management of spent fuel loaded in British Energy’s nuclear reactors prior to the restructuring plan’s effective date, as long as expenditures related to these liabilities, with the exception of Incremental Historic Liabilities as defined in the Historic Liabilities Funding Agreement between British Energy and the United Kingdom Government, do not exceed 2 185 000 000 GBP in December 2002 value;
and
((b)) Any shortfall of the Nuclear Liabilities Fund as regards the payment of liabilities related to British Energy’s nuclear assets decommissioning, British Energy’s uncontracted liabilities and the Incremental Historic Liabilities as defined in the Historic Liabilities Funding Agreement between British Energy and the United Kingdom Government,
is compatible with the common market and the objectives of the Euratom Treaty, subject to compliance with the conditions set out in Article 2 to Article 10.
Article 2 

1. The United Kingdom shall ensure that the restructuring plan as communicated to the Commission by the United Kingdom is fully implemented.
2. The United Kingdom shall submit a report on the implementation of the restructuring not later than six months after the present decision and each year thereafter until such time as the Commission informs it that no further reports are necessary
Article 3 
As soon as expenditure corresponding to the liabilities referred to in point (b) of Article 1 exceed 1 629 000 000 GBP in December 2002 value, the United Kingdom shall submit enhanced additional reports to the Commission demonstrating that the Government payments are restricted to meeting the liabilities referred to in that point, and that proper steps have been taken to limit expenditure to the minimum necessary to meet those liabilities. Those reports shall be submitted yearly. They shall be appended to the yearly reports referred to in Article 2.
Article 4 
For the purpose of computing amounts in December 2002 value referred to in Article 1 and Article 3, the United Kingdom shall use the reference and discount rate published by the Commission for the United Kingdom, updating this rate every five years.
Article 5 

1. The United Kingdom shall require British Energy to undertake by not later than 1 April 2005:
(a) to extract its electricity supply business from British Energy Generation Limited and incorporate it as a separate subsidiary company of British Energy plc (or successor parents);
(b) to consolidate the existing nuclear generation activities in a single company;and
(c) to use all reasonable endeavours to obtain licence modifications under the Electricity Act 1989 or, if such licence modifications cannot be obtained, to give binding undertakings to the United Kingdom Government not limited in time to the effect that: (i) British Energy shall treat its existing nuclear and non-nuclear generation businesses as separate businesses for licensing purposes (or for the purposes of any undertaking to the United Kingdom Government); and (ii) the existing nuclear generation business shall not provide any cross-subsidy to any other business in the British Energy group.
2. In the event that the undertaking in paragraph (c) is not implemented by licence condition, the United Kingdom shall submit a yearly report to the Commission establishing evidence that there has been no cross-subsidisation by the existing nuclear generation business to any other business of the British Energy group. This report shall be based on analysis carried out by independent accounting experts. It can be added to the report referred to in Article 2. This should not prejudice the possibility that an implementation by licence condition be put in place later on if it becomes possible.
3. The United Kingdom shall inform the Commission as soon as undertakings in paragraphs 1 and 2 are implemented.
Article 6 
The United Kingdom shall require British Energy to undertake, for a period of six years from the date of this decision, not to own or have rights of control over:

— registered operational fossil-fuelled generating capacity in the European Economic Area,
or
— large scale registered hydro-electric, as defined in the Renewables Obligation Order 2002, generating capacity in the United Kingdom,
(both types of capacity being known hereunder as restricted capacity) which in aggregate exceeds 2 020 MW provided that:

((a)) during a pending disposal period (as defined below), British Energy shall be entitled to own or have rights of control over restricted capacity in excess of 2 020 MW on condition that it does not operate such excess restricted capacity or divests itself of all operational control and interest in the excess restricted capacity or the power generated from the excess restricted capacity. For this purpose, a ‘pending disposal period’ is the period between:

((i)) the receipt by Eggborough Power Limited or Eggborough Power Holdings Limited of a notice that: 1. an option to acquire the shares in Eggborough Power Limited or the Eggborough station is to be exercised; or any of the security over the shares in Eggborough Power Limited or the Eggborough station is to be exercised;
and
((ii)) the date on which the registered generating capacity of the Eggborough station is no longer available to the British Energy group;
((b)) if one of the disposal options over the shares in Eggborough Power Limited or the Eggborough station is completed, British Energy shall be entitled to own or have rights of control over restricted capacity not exceeding 2 222 MW on condition that it declares its restricted capacity to the operator of the National Grid as 2 020 MW and does not operate more than 2 020 MW of restricted capacity;
or
((c)) if the capacity at the Eggborough stations becomes unavailable to the British Energy group through irreparable failure or force majeure, British Energy shall be entitled to own or have rights of control over restricted capacity not exceeding 2 222 MW on condition that it declares its restricted capacity to the operator of the National Grid as 2 020 MW and does not operate more than 2 020 MW of restricted capacity.
Article 7 
The United Kingdom shall require British Energy to undertake, for a period of six years from the date of this decision, not to own or have rights of control over registered operational nuclear generating capacity in the European Economic Area other than its existing nuclear generation assets or operation and maintenance contracts where British Energy has no interest in the electricity output, without the prior written consent of the Commission.
Article 8 
The United Kingdom shall appoint, within four months of this decision, and following an open and transparent process, an independent expert for the purpose of monitoring the compliance of BE with the conditions set out in Article 9 (hereafter the independent expert). It shall inform the Commission immediately of this appointment.
Article 9 

1. The United Kingdom shall require British Energy to undertake:
(a) for a period of six years following the appointment of the Independent Expert, not to offer to supply non-domestic end-users who purchase electricity directly from British Energy on terms where the price of the energy element of the contract with the users is below the prevailing wholesale market price, provided that in exceptional market circumstances where certain objective tests are judged by the independent expert to be satisfied as described in Article 10 (exceptional market circumstances), then British Energy shall be entitled, while such exceptional circumstances continue to prevail, to price the energy element of the contract at below the prevailing wholesale market price in good faith where necessary to enable British Energy to respond to competition, under the conditions of Article 10;and
(b) to cooperate in good faith with the independent expert, and to comply with all reasonable requests from the Independent Expert in a timely manner including requests for information, documents or access to staff or management.
2. The independent expert shall report yearly to the United Kingdom on the compliance of British Energy with these conditions. The United Kingdom shall make the reports available to the Commission.
Article 10 

1. The tests used for the purpose of deciding whether exceptional market circumstances occur shall be the following:
(a) in any period of […] (ending not more than […] before the date of the Amber Notice as defined below), […] of those existing British Energy non-domestic end-users to whom British Energy has made offers of supply on terms where the margin on the supply of energy element of the contract over the prevailing wholesale price is […] have rejected British Energy’s offer;
(b) volumes traded in the wholesale electricity market over a […] period have dropped to less than […] of the average of those traded in the same period in the last […] for which data is available;
(c) British Energy offers to supply a minimum of […] of electricity in the wholesale market […] and that volume is not sold within a period of […].
2. When faced with circumstances approaching these and if British Energy considers it was possible it might need to invoke exceptional market circumstances, British Energy shall first inform the Independent Expert, outlining its analysis of the situation and the position in relation to the objective tests (Amber Notice).
3. If circumstances do not improve following the Amber Notice, and if test (a) together with test (b) or test (c) above is met, British Energy shall notify the Independent Expert that it is going to respond to competition by pricing below the wholesale price and supplies the most recent evidence available to British Energy. The independent expert shall have then no more than 24 hours to confirm or otherwise that test (a) together with (b) or (c) above are met and accordingly declare the existence of Exceptional Market Circumstances.
4. If the independent expert declares the existence of exceptional market circumstances, British Energy shall be entitled for a period of […] of the Independent Expert’s decision to make bona fide offers at prices to meet competition in the direct sales to business market.
5. The […] period may be renewed by the independent expert for as long as test c) above is met.
6. At the end of the period, the price restriction set out in Article 9 shall apply again to British Energy.
7. After the period, British Energy shall provide a report to the independent expert summarising its sales activities during the period. This information shall be reviewed in the Independent Expert’s yearly report.
8. Following the end of the contract round during which Exceptional Market Circumstances occurred, the Independent Expert shall publish the fact that he had made a determination of such circumstances and how long they lasted.
Article 11 
This Decision is addressed to the United Kingdom of Great Britain and Northern Ireland.
Done at Brussels, 22 September 2004.
For the Commission
Mario MONTI
Member of the Commission