Consumers are locked into a “risky and expensive project” over the Government deal for a new nuclear power plant at Hinkley Point, the National Audit Office (NAO) has warned.
The Department for Business, Energy and Industrial Strategy (BEIS) finalised the £18bn deal for the Hinkley Point C reactor last September, with energy consumers paying subsidies on their bills for the scheme for 35 years.
But payments set to be added to consumer bills have soared from an estimated £6bn to £30bn, a NAO report said.
The report added that the costs and risks to consumers have not been sufficiently considered and that it will not be known for decades whether the plant is value for money.
The case for Hinkley Point has also weakened since the Government agreed key commercial terms in 2013, the NAO added.
The company building the plant – which is two-thirds owned by French energy giant EDF and one-third by China General Nuclear Power Group – will receive a guaranteed price for the power it generates.
Image: The construction site at Hinkley Point C near Bridgwater, Somerset
But the deal for the “strike price” – £92.50 per megawatt/hour in 2012 prices – was agreed without competition.
Falling fossil fuel costs, which reduce wholesale prices of electricity, mean the forecast for top-up payments on consumer bills have ballooned.
Delays have pushed back construction of the plant, while the expected cost of low-carbon alternatives have fallen more than expected, the report found.
An estimated £10-£15 will be added to the average bill up to 2030 to pay for Hinkley Point C, but that could rise if it is delayed.
The report found that BEIS has not taken into account the fact that bill payers will be locked into paying for the plant after 2030, when low-carbon alternatives will be cheaper.
Amyas Morse, head of the NAO, said: “The department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace.
“Time will tell whether the deal represents value for money, but we cannot say the department has maximised the chances that it will be.”
An EDF Energy spokesman said the report showed Hinkley Point C remained good value compared with alternative choices.
“Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower,” he said.
A BEIS spokesman said: “Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering six million homes and creating more than 26,000 jobs and apprenticeships in the process.”
Source: SKY News