UPDATE 2-EDF, France agree on 400 mln euro compensation for Fessenheim closure-source

(Adds timing details)

PARIS, Aug 24 (Reuters) - French state-controlled utility EDF and the French government have agreed on a 400 million euro ($450 million) compensation package for the closure of EDF’s Fessenheim nuclear plant, a source familiar with the situation said on Wednesday.

The source said the French state would pay EDF 100 million euros in 2019 with a second fixed payment of 300 million euros in 2020. EDF could potentially receive further payments depending on future power prices and nuclear costs, the source added.

The energy ministry could not immediately be reached.

French President Francois Hollande pledged in his election campaign in 2012 to close Fessenheim in eastern France, one of the country’s oldest reactors, before the end of his mandate in May 2017.

The socialist government has asked EDF several times to launch the lengthy closure procedure before the end of 2016, but the firm wanted to reach an agreement on compensation first.

At the end of July, EDF said compensation for a Fessenheim closure would consist of a fixed and variable part, partly based on how much profit EDF would forego based on the assumption it could continue running the plant till 2041 and based on market prices and the effective costs at similar 900 megawatt plants.

EDF’s Works Council, whose recommendations are not binding for management, will review the Fessenheim compensation package on Sept. 14, before the utility’s board makes a decision on a possible closure later this year.

The plant’s eventual closure is not entirely certain however.

An energy transition law passed last year specified only that French nuclear capacity will remain at current levels, which means EDF would only have to close one of its older plants when it completes a new plant under construction in Flamanville.

Flamanville is not due to open before 2018 while Hollande’s term ends in May 2017. Conservative challengers to the presidency have said they would keep Fessenheim open. ($1 = 0.8890 euros) (Reporting by Geert De Clercq; Editing by Bate Felix and Alexandra Hudson)