Commission Backs £5bn British Energy Deal

British Energy, the nuclear generator, yesterday welcomed a decision by the European commission to approve a government-backed £5bn rescue plan.

Patricia Hewitt, the trade secretary, also welcomed the decision. Two years ago the company stood on the brink of insolvency.

The approval, overturning an initial ruling that the state aid was unlawful, is a blow to Polygon, the hedge fund demanding a drastic revision of the plan to give a bigger stake in BE to shareholders.

Polygon, which unsuccessfully sought commission backing, faces a US court injunction against its requisition of an extraordinary meeting to approve an alternative rescue plan.

The rescue was denounced by green campaigners as "squandering billions of pounds of taxpayers' money on an unsafe energy system".

Mario Monti, the competition commissioner, said the decision paved the way for British Energy's survival. "It takes full account of comments made by BE's competitors and the need to ensure security of supply at all times."

BE, which supplies a fifth of Britain's power, has agreed to ringfence its eight nuclear plants, which are to get up to £4bn in government aid over 80 years to cover their decommissioning, and cheaper fuel and reprocessing contracts with British Nuclear Fuels in a separate deal worth some £1.2bn.

The group, originally kept afloat by a £650m government loan, will also set up two divisions to run the coal-fired plant at Eggborough, north Yorkshire, and to operate its direct sales to big commercial customers; the move prevents any use of state aid to cross-subsidise these businesses.