Nuclenor fined for early Garoña closure

18 July 2014

The operator of Spain's Garoña nuclear power plant, Nuclenor, has been fined €18.4 million ($24.9 million) by the country's financial regulator for shutting down the plant six months earlier than originally authorized. The company is appealing the penalty.

Garoña (Image: Nuclenor)

In September 2012, Nuclenor - a joint venture of Endesa and Iberdrola - missed the deadline to submit an operating licence renewal application for Garoña meaning that it had to shut by the time its licence expired on 6 July 2013. However, the reactor was closed in mid-December 2012 to avoid a full year of retroactive tax charges for which Nuclenor would have been liable if it was operating on 1 January 2013.

The Spanish financial regulator - the National Commission on Financial Markets and Competition (Comision Nacional de los Mercados y la Competencia, CNMC) - launched an investigation a year ago into the plant's closure. It claimed that there were no technical or safety reasons for Garoña to shut in advance of the due date.

The CNMC has now concluded that Nuclenor committed "a very serious violation" of the country's laws governing the electricity sector by reducing production capacity or supply of electricity without permission. It has accordingly imposed a penalty of €18.4 million ($24.9 million) against Nuclenor. The CNMC said that the amount of the fine was calculated according to criteria set under electricity sector laws, which states that such a fine cannot exceed 10% of the annual turnover of the offending party. Nuclenor had a turnover of €184 million ($250 million) in 2011, the last full year before Garoña's closure.

Penalty contended

However, Nuclenor said that it will lodge an appeal against the fine with the administrative chamber of the high court. The company says that its decision to close Garoña early was within its power and no special authorization for its action was required.

Restart possible?

Earlier this year, industry succeeded in lobbying for regulatory changes that made it possible for a reactor closed for reasons unrelated to safety or radiological protection to be granted a new operating licence within 12 months of its shutdown.

In May, Nuclenor submitted an application to the Ministry of Industry, Energy and Tourism for a new license for Garoña to operate until 2031. A decision on issuing that licence has yet to be made.

Nuclenor claims that Spain's nuclear energy act is a special law that overrides the electric power act and that it had fully complied with the nuclear energy legislation when closing the plant.

In addition, it says that the tax on used nuclear fuel that it faced under tax measures for sustainable energy, part of the country's energy reform bill, were "entirely unpredictable and unexpected." These taxes, Nuclenor claims, justified its decision to shut Garoña "due to unforeseen circumstances."

The company said the Garoña plant would have faced additional taxes in 2013 of €150 million ($203 million) if it had continued operating. These, it claims, would have forced Nuclenor to the point where it would have to consider dissolution and bankruptcy. Shutting Garoña early enabled the company to continue meeting its obligations to its workers and suppliers, it said.

According to Nuclenor, the early closure of Garoña was "a responsible decision, and the only viable solution to the situation of insolvency created by the adoption of the law on tax measures for sustainable energy."

Researched and written
by World Nuclear News