UPDATE 1-EU state aid probe likely over British plan for EDF nuclear plant

Mon Dec 2, 2013 10:17am EST

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* Formal EU investigations can take years

* Commission working on revision of state aid guidelines

* Almunia also confirms German investigation to go ahead

By Barbara Lewis and Foo Yun Chee

BRUSSELS, Dec 2 (Reuters) - EU regulators are likely to open a formal investigation into whether Britain's offer of state guarantees, to help finance a nuclear plant to be built by France's EDF, conform with the bloc's rules, its competition commissioner said on Monday.

Britain in October signed a deal with EDF to build a nuclear plant at Hinkley Point in southwest England and became the first European country to offer a guaranteed power price over 35 years for a new nuclear project.

"Two to three weeks ago we received notification from the UK," EU Competition Commissioner Joaquin Almunia told a Brussels conference organised by Eurelectric, which represents the EU electricity industry.

"We are starting to analyse what is in the British proposal. Probably we will open a formal investigation because many people are asking the same question as you do," he said when asked whether the British proposal for 35 years of a guaranteed energy price was too long under the terms of EU rules on state aid.

Britain has said it is confident it will get clearance, but a formal European Commission probe could take years, throwing uncertainty over the nation's plans.

"I have no reason to believe the Commission will block it," British Energy Minister Michael Fallon said at a conference in London on Monday when asked about his confidence in a positive outcome of the Commission's state aid probe.

The Commission is revising its state aid guidelines and is expected to finalise the rules for 2014-2020 next year.

It has said they will not specifically include nuclear energy, dealing another blow to Britain's hopes of early certainty. Instead, each project will be assessed on its own merits.

The general trend will be to enforce a phase-out of overly generous subsidies for renewable energy or anything else that distorts the market, while cross-border links and efforts to complete a single energy market across the 28 EU member states will be encouraged.

Almunia also confirmed on Monday that he would launch before Christmas a formal investigation into German waivers of renewable energy surcharges for some of its intensive energy users, which the Commission suspects may be unfair.

"We will open an investigation into the Geman exemption before Christmas," Almunia said. He said the probe would go ahead despite the new German coalition government's plan to revise its legislation.

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