Tim Gosling in Prague -

Austria announced it is ready to launch a legal challenge against a potential funding deal for a new UK nuclear plant on October 3. The move poses a threat to the Czech Republic's hopes of expanding its Temelin facility, which sits on Austria's doorstep.

A few months since it saw its plans challenged in Brussels, the UK hopes to seal a deal on public funding for the £16bn (€20bn) Hinkley Point plant with the European Commission this week, after EU officials said on September 22 that they are open to a compromise presented by the UK. The rejection of the UK's "contract-for-difference" funding model was seen as a key element in the Czech government's announcement in April that it would not offer state-owned utility CEZ pricing guarantees on the power produced at Temelin. CEZ CEO Daniel Benes said last week that the new UK deal has "cleared the way" for resurrecting the €10bn Czech project.

However, Vienna hopes to be the fly in the ointment. The nuclear ambitions of the Visegrad Four, all of which are working on plans to increase nuclear capacity, are irking neighbours that have rejected nuclear power since the Fukushima disaster in Japan. With Temelin on its doorstep, Austria has bitterly fought the plant's expansion plans for years.

Austrian Chancellor Werner Faymann and Vice-Chancellor Reinhold Mitterlehner sent a letter to European Commission President Jose Manuel Barroso insisting Vienna is ready to take the EU executive to the European Court of Justice (ECJ) should it agree to the UK scheme. A vote on the issue is due in Brussels on October 8.

"Should the EU Commission undertake this step, then it must expect a lawsuit at the highest court," said Faymann, according to Reuters. "Alternative forms of energy are worthy of subsidies, not nuclear energy," he said, as quoted by his spokesman. Under the plan, the UK would be allowed to offer EDF a guaranteed power price of £92.50 per megawatt-hour - more than twice the current market rate.

"Hinkley Point... would set a negative precedence to open this type of subsidy for nuclear energy. The EU-Commission must prevent this, if not it must expect a lawsuit from Austria at the European Court of Justice," Mitterlehner said. The pledges from Austria's top officials back up insistence from Environment Minister Andrae Rupprechter on September 24 that Vienna will fight any approval of the scheme.

While Austria's green energy credentials are well known, its high profile fight against the UK plant are clearly pushed by its concern over Temelin. The plant sits just a handful of miles from the Austrian border, and has caused friction with Prague for years.

However, the rising concern in Vienna is matched by growing excitement in Prague. Benes told Czech business daily Hospodarske Noviny that approval of the UK funding model will offer a European precedent that will help CEZ relaunch the Temelin expansion. "One argument was that it would never go through because it is public support," the CEO said. "Now, though, Brussels approved it for the British. It is always good when some one big clears the way for you."