THE Government's deal for Hinkley Point C has locked consumers into a 'risky and expensive' project with uncertain strategic and economic benefits, a scathing new report has found.

The National Audit Office (NAO), which scrutinises government spending, has slammed the Department for Business, Energy and Industrial Strategy, saying it 'has not sufficiently considered the costs and risks for consumers'.

The NAO report says that when the Government was making its economic case for Hinkley C, 'favourable' assumptions were made about the future fossil fuel prices, renewable costs and follow on nuclear projects which made the deal appear better value for money.

Somerset County Gazette:

The NAO report says it is a widely shared view that the UK needs some new nuclear power to ensure the lowest-cost route to decarbonisation, however is critical of the Hinkley deal.

"The Government only considered the impact on bills up to 2030, which does not take into account the fact that consumers are locked into paying for Hinkley C long afterwards. It did not conclude whether the forecast top-up payments are affordable."

The NAO concluded that the Government's case for the project had weakened since agreeing key commercial terms in 2013.

"Delays have pushed back the nuclear power plant’s construction, and the expected cost of top-up payments under the Hinkley Point C’s contract for difference has increased from £6 billion to £30 billion. 

"But the Department’s capacity to take alternative approaches to the deal were limited after it had agreed terms. "The government has increasingly emphasised Hinkley Point C's unquantified strategic benefits, but it has little control over these and no plan yet in place to realise them."

The NAO also add that the reactor design for HPC is 'unproven' and that EDF's financial position had weakened since the terms were agreed.
"It will not be known for decades whether Hinkley Point C will be value for money," the report concludes.

Amyas Morse, head of the National Audit Office, 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.”

However French energy giant EDF remained positive about the NAO findings.

"Today's report shows that Hinkley Point C remains good value for consumers compared with alternative choices," and EDF spokesman said.

"Consumers won’t pay a penny until the power station is operating and it is EDF Energy and CGN who will take the risk and responsibility of delivering it. 

"The project is having a major impact on the UK’s industrial capacity, jobs and skills. Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower."

Bridgwater and West Somerset MP Ian Liddell-Grainger said the decision to accept fixed-term energy prices for Hinkley was 'about securing the future of UK energy'.

"This project was started under Tony Blair's government and it is the right decision. Yes, some things have changed since the deal was agreed but equally they could change again," Mr Liddell-Grainger said.

"It was vital to get this project off the ground and it is hugely beneficial to the local area."