Fears future price rises could dwarf recent hikes
The deal to build Britain's first new nuclear power station for a generation has prompted fears of future price rises that could dwarf recent hikes in energy bills.
Ministers have agreed to pay £92.50 per megawatt hour for electricity produced at the £16 billion Hinkley Point C power plant when it comes into operation in 2023. Critics fear the price, which is around double the current market rate, will not be competitive with other fuels once the plant opens.
Fixing the price means that if the market value of power is below this level in 2023 – EDF will be reimbursed the difference. However, Energy Secretary Ed Davey, who spent more than a year negotiating the 'strike price', said he had secured a good deal.
"We think it would be good value if (the strike price) was a little higher," he said.
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"I was determined to get them below £90 so I could prove to everybody we had got a good deal. What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options. We have got an early start on our long-term energy needs."
But Which? executive director Richard Lloyd called for the deal to include a clause which would trigger a refund to consumers if it turns out that the Government has overpaid.
"Rising energy bills are one of the top concerns for cash-strapped consumers, so everyone will want to be assured that the price the Government has agreed for new nuclear power is fair," he said.
"The Hinkley deal commits billions of pounds of bill-payers' money but it has been done without transparent, independent scrutiny.
"If it emerges that the Government has overpaid, we believe there should be a mechanism to refund consumers instead of a windfall to the suppliers."