New UK nuclear plants threatened by EU state aid rules

The Government’s energy strategy hinges on contracts to guarantee investors the price they will receive for power generated by new plants.

But Charles Hendry, the energy minister, said on Tuesday that the Government could not provide the direct Treasury-backed guarantees investors want, because of EU state aid rules.

Ministers are yet to explain exactly who will act as the counterparty instead of the Treasury, but industry figures warned the Energy Select Committee that alternatives would be less credit-worthy and so would push up costs.

Volker Beckers, chief executive of RWE npower, said the counterparty was “crucial”. When the contracts for difference (CfD) – the power price guarantee framework – were proposed last year, companies expected they would be “backed by government”, and that effectively the Treasury would ultimately be “signing the cheque”. “Now we are miles away from that point,” he said.

Investors could no longer count on a “AAA-backed contract” and that “inevitably has an impact” on the cost of capital, he said.

RWE and E.ON pulled out of a UK nuclear joint venture in March, citing financial difficulties in Germany, and are seeking a buyer.

A consortium led by EDF will decide this year whether to build new reactors in Somerset and is negotiating with ministers over its CfD.

Mr Hendry told MPs that, instead of Treasury-backed guarantees, the proposed CfD system would be “delivered” by National Grid – but if a future government reneged on agreed power prices, the energy companies could then sue the Government for costs.

“EDF says that there are other ways in which it would be cheaper for them but we are yet to be persuaded that that would be permissible under state aid rules,” he told The Daily Telegraph.

Tim Yeo, energy committee chairman, said the proposal was “bound to push up the cost of capital and, at worst, may deter investment”. He urged ministers to raise the issue of state aid with the European Commission “urgently”.

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Okla. court favors state in tax collection lawsuit

OKLAHOMA CITY (AP) -- The Oklahoma Supreme Court on Tuesday ruled that the state can require cities to use the Oklahoma Tax Commission to collect city sales taxes.

The decision overturns a lower court ruling in a lawsuit filed by the city of Tulsa.

Tulsa spokeswoman Michelle Allen said attorneys for the city planned to meet later with Mayor Dewey Bartlett to discuss the ruling.

"The legal department is reviewing it and we don't have a comment this time," Allen said.

The state attorney general's office did not immediately respond to phone calls seeking comment.

The state Legislature, on the final day of its 2010 session, approved the bill that was later signed into law that required the Tax Commission to collect municipal sales taxes in what was called an effort to streamline tax collections statewide.

On June 1, 2010, one month before the law went into effect, Tulsa contracted with Alabama-based Revenue Discovery Systems to collect its taxes. Officials estimated the city would save about $700,000 from the $2 million a year it paid the Tax Commission in collection fees.

The city's lawsuit, filed in August 2010, claimed the law unconstitutionally impaired the city's contract and infringes on the city's powers granted under the state constitution and the city charter.

An Oklahoma County District Court judge ruled in favor of the city in May 2011 and the state appealed.

The state Supreme Court's unanimous ruling said the Legislature has the authority to develop a uniform tax collection system and that the Legislature's authority supersedes the city charter.

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Key Penn State witness seeks whistle-blower suit

HARRISBURG, Pa. (AP) -- The Penn State football assistant whose report of Jerry Sandusky allegedly attacking a child in the showers led to Joe Paterno's firing said in a court filing Tuesday that he is suing the school.

The "writ of summons" filed by Mike McQueary's lawyer described it as a whistle-blower case, but the brief document was not accompanied by a full complaint that would lay out the allegations.

The filing was first reported by the Centre Daily Times on its website.

McQueary's attorney, Elliott Strokoff of Harrisburg, did not respond to a phone message at his office late Tuesday. His father, John McQueary, declined to comment on his behalf.

McQueary, then a graduate assistant, has said he complained to Paterno of seeing the boy in a locker room shower naked with Sandusky.

He testified in December that he believed Sandusky was molesting the boy and "having some type of sexual intercourse with him," but added he was not "100 percent" certain they were having intercourse because of his vantage point.

Penn State's trustees have said they fired Paterno as coach partly because of his response to the incident. Paterno reported the matter to administrators Gary Schultz and Tim Curley, which trustees have called "his minimum legal duty" and "a failure of leadership." Paterno was fired as coach in November and died in January of lung cancer.

McQueary, who was a receivers coach, was placed on paid administrative leave by the school after the three men were arrested in November. All three have pleaded not guilty.

Penn State spokesman Dave La Torre said school officials were unable to comment because they had not seen the complaint.

Pennsylvania prosecutors said Monday they now believe the alleged shower assault took place a year earlier than they first claimed.

The attorney general's office said in a court filing that investigators concluded the alleged attack took place around Feb. 9, 2001. Previously filed court documents, including a grand jury report issued before Sandusky's arrest dated it March 1, 2002.

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Associated Press writer Genaro Armas in State College contributed to this report.

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