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
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk