Nuclear fallout for UK taxpayer

TAXPAYERS could be asked to stump up another £15bn for the building of Britain’s newest power station, it has emerged.

The guarantees could be activated if the French and Chinese firms constructing the plant run over budget – an event experts believe is quite likely.

The huge additonal sums would come on top of £2bn of Government funds already pledged towards the construction of the Hinkley Point C plant in Somerset.

The generator, which will capable of providing 7pc of Britain’s electricity, will be built and run by EDF, the French state-controlled energy giant with support from the Chinese government.

No major British f i rms are involved in building nuclear power stations because Gordon Brown sold the main UK operator to EDF in 2008.

A formal deal to press ahead with construction at Hinkley will be signed next week by Chinese President Xi Jinping during an official visit to the UK.

Details of the agreement, which is still being finalised, are set to be unveiled on Wednesday.

It will then require a final green light from EDF’s board in Paris, which is expected to come by the end of the year.

But the project is heavily delayed and has seen its costs spiral from £10bn to £25bn.

Once constructed, it will receive a guaranteed price of £92.50 per Megawatt hour of electricity produced – a rate almost double the current price – for 35 years. While consumers will be alarmed by this, EDF and the Chinese claim they need prices to be guaranteed at that level to offset the risks of the project. The Government, which needs to see the plant built to help Britain hits its ambitious climate change targets, has also pledged to help finance construction of the project. George Osborne previously pledged to underwrite £2bn of loans to EDF.

At the time the French company welcomed the guarantees and said they ‘will pave the way for a final investment decision’. But details buried in EU documents indicate that another £15bn could be offered in further incentives.

The European Commission last year granted the Government ‘state aid’ clearance, which means it does not consider the financial support to be tantamount to bribery. Terms of the state aid grant allow the Chancellor to hand over up to £17bn in guarantees to EDF.

Sources familiar with the agreement say that Government support is not capped at £2bn, and that more guarantees can be given even once construction is underway. The backing comes from the Government’s infrastructure guarantees, which are designed to help large and strategic schemes get off the ground.

But the larger pot available raises the spectre of EDF being able to dip even deeper into British taxpayers’ pockets.

The company has been plagued by cost over-runs on an identical reactor it is building in Flamanville in France, which half a decade behind schedule and three times over budget.

Hinkley Point would be the first nuclear reactor built in Britain since 1995. A programme to build more new nuclear plants rides on the success of Hinkley.

EDF wants to build another site at Sizewell in Suffolk, while its Chinese investors are seeking clearance to erect their own station at Bradwell in Essex. It is understood that Chinese engineers will be on site at both Hinkley and Sizewell.

Japanese giant Hitachi is also planning two plants, while another consortium – Nugen – also has nuclear ambitions at Sellafield.

Further delays – or the cancellation – of the Hinkley Point plant would put some or all of these projects in jeopardy.

EDF refused to comment.