UK Public Accounts Committee slams government over Hinkley Point nuclear deal

The pricing arrangements made in connection with a deal to build the Hinkley Point C nuclear power plant have come in for criticism by the UK’s Public Accounts Committee.

The committee says the government failed to protect energy customers when agreeing the deal, and has warned against building more nuclear plants on that basis.
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The government is trying to reduce household energy prices and is under pressure from suppliers, who say policy costs are partly responsible for spiralling bills.

At the same time the country is trying to replace an ageing coal and nuclear fleet, and struggling to do so due to the high costs involved.

“Its blinkered determination to agree the Hinkley deal … means that for years to come energy consumers will face costs running to many times the original estimate,” said Meg Hiller, chair of the cross-party Public Accounts Committee, which published a report on the Hinkley deal on Wednesday.

The government in 2013 agreed to give France’s EDF a minimum price guarantee of 92.5 pounds per megawatt-hour, inflation linked, for 35 years for Hinkley C, the first nuclear plant to be built in Britain for 20 years. Electricity payment top-ups, committed by the government and ultimately paid for by consumers through bills, could reach 30 billion pounds, five times more than originally expected, Britain’s National Audit Office said in June.

“(Britain’s energy) department did not attempt to renegotiate the deal in light of the weakening case because it assumed the project’s investors would not have accepted a lower return,” the report said.

Under the contract, the government will pay the difference between the wholesale electricity price and the minimum it has promised – so-called top-up payments.

The committee said the government should re-evaluate and publish its strategic case for supporting more nuclear plants before agreeing any more deals.

Hitachi Ltd’s Horizon unit, Toshiba’s Nugen and China General Nuclear Power Corp plan to build nuclear plants in Britain but will need support from the government.à‚ 

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