Taxpayer billions could be secretly funnelled to Edf to underwrite cost of proposed power station at Hinkley Point

 

Billions of pounds of taxpayers money could be secretly funnelled to the French state nuclear company Edf to underwrite the cost of its proposed new power station at Hinkley Point in Somerset, it emerged today.

The energy bill has quietly granted energy secretary Ed Davey the power to keep contract details of the crucial Hinkley Point C project a secret if he decides it is commercially sensitive to disclose them, an analysis of the bill has revealed.

Experts condemned the provision, saying it paves the way for the government to write a cheque for billions of dollars to cover the cost of budget over-runs or building delays at Hinkley Point, without the public or parliament ever finding out.

The power came to light three months after energy minister John Hayes hinted that he was considering breaking with government tradition and underwriting the construction costs of new nuclear plants.

Dr Robert Gross, director of Imperial College’s centre for energy policy and technology, said: “If the government writes a contract that allows cost escalations to translate into subsidy increases then it is effectively writing a blank cheque signed on behalf of bill payers.”

“Transparency over price setting and a clear and auditable process for determining prices is essential where the government is choosing to subsidise technologies that the market would otherwise not invest in. There is an obvious danger that companies will be able to out-negotiate officials and bill-payers will bear the cost,” added Dr Gross, who advised the government on November’s Energy Bill.

Analysts say Edf has the government over a barrel because the Hinkley Point nuclear plant could be crucial in ensuring the lights stay on in Britain, which is facing power shortages as EU requirements to close polluting coal-fired plants in favour of low-carbon alternatives put huge pressure on the electricity grid.

However, many Briton’s remain opposed to nuclear energy and face a huge backlash from consumers if the government promises the kind of financial guarantees that may be needed to persuade Edf to go through with the project.

The government has been locked in discussions for months over the financial terms of Hinkley Point and in October said that “there will be full transparency over the terms agreed”.

A spokesman for the Department of Energy and Climate Change today insisted that it is still “committed to transparency over the terms of any contract agreed for new nuclear projects”.

“The bill only permits information to be excluded from a contract in narrow circumstances, where it comprises a trade secret or if its disclosure would risk an actionable breach of confidence or prejudice commercial interests…We will however publish enough information to show what the terms of the deal are,” the spokesman added.

But critics accused the government of backtracking on that promise through the “commercial interests” provision, which applies to all contracts with companies who want to invest in low-carbon generation ahead of the full provisions of the Energy Bill coming into force – essentially, this refers to Hinkley Point C.

Dr Doug Parr, Greenpeace’s chief scientist, said: “Looking at the huge cost overruns on nuclear power stations in Finland and France, the developers may well want to have government take on some of the risks, which could amount to billions of pounds.”

“But doing so could be seen as damaging the reputation, and therefore the commercial interests, of the EPR makers Areva, as well as that of Edf,” he added.

The Hinkley Point C project will use the same European Pressurised Reactor (EPR) design that Edf and Areva are building in France, where costs have billowed from an initial estimate of €2bn (£1.7bn) in 2003 to €8.5bn.

Meanwhile, the cost of Hinkley Point, which Edf put at £9bn in December 2010, is now reported to be £14bn.

Energy minister John Hayes said in a Parliamentary debate on the provision this week that: “It is possible that some contracts may contain detailed financial information belonging to a generator that falls into [that category]. Disclosure of such information could significantly harm the interests of a generator.

“One result of that would be to discourage businesses from entering into that kind of relationship. If they felt that the bill did not provide adequate protection of their interests….it is unlikely that they would want to be involved in negotiations that might lead to an undesirable outcome for them in respect of their competitive, business and shareholder interest. We would all again acknowledge that.”

Centrica, the owner of British Gas, is considering taking a 20 per cent stake in the project, although it is widely expected to pull out of the project, even if the government agrees to underwrite the cost overruns.

Start your day with The Independent, sign up for daily news emails
Sport
Brendan Rodgers is confident that Sterling will put pen to paper on a new deal at Anfield
footballLIVE: Follow all the latest from tonight's Capital One quarter-finals
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Life and Style
tech
News
Not quite what they were expecting
news

When teaching the meaning of Christmas backfires

Arts and Entertainment
Angelina Jolie and Sony Pictures co-chairman Amy Pascal at the Golden Globes in 2011
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Recruitment Genius: Business Development Executive - Nationwide - OTE £65,000

£30000 - £65000 per annum: Recruitment Genius: This small technology business ...

Day In a Page

Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser
'Enhanced interrogation techniques?' When language is distorted to hide state crimes

Robert Fisk on the CIA 'torture report'

Once again language is distorted in order to hide US state wrongdoing
Radio 1’s new chart host must placate the Swifties and Azaleans

Radio 1 to mediate between the Swifties and Azaleans

New chart host Clara Amfo must placate pop's fan armies
Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

The head of Veterans Aid on how his charity is changing perceptions of ex-servicemen and women in need
Torture: It didn't work then, it doesn't work now

Torture: It didn't work then, it doesn't work now

Its use is always wrong and, despite CIA justifications post 9/11, the information obtained from it is invariably tainted, argues Patrick Cockburn
Rebranding Christmas: More public bodies are refusing to give the festival its name for fear of causing offence

Rebranding Christmas

More public bodies are refusing to give the festival its name for fear of causing offence. They are missing the point, and we all need to grow up
A Greek island - yours for the price of a London flat

A sun-kissed island - yours for the price of a London flat

Cash-strapped Greeks are selling off their slices of paradise
Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

New system means that evergreen songs could top the festive charts
Prince of Wales: Gruff Rhys on his rock odyssey, and the trouble with independence

Prince of Wales: Gruff Rhys

He is a musician of wondrous oddity. He is on a perpetual quest to seek the lost tribes of the Welsh diaspora. Just don't ask Gruff Rhys if he's a national treasure...