A BUSINESS rates break for Hartlepool's nuclear power station will be examined as part of an in-depth probe into plans to bail out British Energy.

European Commission officials will investigate whether the decision to allow the struggling power company to defer its rates for five months complies with EU rules.

Five local authorities, including Hartlepool Borough Council, agreed to give the company a business rates break for its power stations between last November and March.

Figures obtained by environmental campaign group Friends of the Earth show the saving is more than £4m before interest, with the amount in Hartlepool £447,508.

The investigation will also examine whether a £650m Government loan - the only thing keeping British Energy afloat - breaks EU regulations on state aid.

Last week, the Commission said approval of the aid would depend on "viable, long-term plans" for the company.

British Energy's rivals have complained the aid amounts to unfair competition.

The Commission also wants confirmation that the company will be making a "significant contribution" to its own revival by contributing to the restructuring effort.

The company produces about one fifth of UK electricity needs and has blamed its financial plight on the high fixed costs of nuclear generation and a sharp plunge in electricity prices following the opening up of the wholesale power market.

The result was a £4.3bn pre-tax loss in the last financial year - compared to a £493m loss the previous year.

Frantic efforts have been going on for months to save the business, but last month British Energy admitted there were still difficulties agreeing restructuring plans with creditors.

If Brussels think the Government cash is merely propping up an unsalvageable business, to the disadvantage of rivals, the aid tap will be turned off.

A British Energy spokesman said: "We have been expecting the opening of the formal investigation and look forward to providing all necessary information and assistance that the Commission needs to complete its investigation of the proposed restructuring plan that the UK Government has put forward for the company."

A spokesman for the Hartlepool-based Nuclear Free Future campaign group said: "Renewable energy operators were put at a disadvantage by this favouritism while council tax payers paid the bill."

A Hartlepool Borough Council spokesman said: "We feel it would be inappropriate to comment at this stage, given that the European Commission is mounting an investigation."