COFFERS at West Somerset Council are set to take a £15,000 hit just because the council has to process a £6.5m business rates refund to Hinkley Point B.

The power station is owed the money because it has been generating less electricity than expected and is entitled to a refund of £6,564,000, dating back to September 2006.

That money is paid out by West Somerset Council which is then reimbursed by the government, about three months later.

To deliver the refund, the council will have to borrow the cash and has had to increase its borrowing limit from £15m to £22m.

The estimated £15,000 cost to the council comes from the three-month delay in being reimbursed by the government, which amounts to a daily interest charge of about £170.

A report to the members of the council states: “This council does not have funds available to process a refund of this value in advance of central government reimbursement and it will therefore have to resort to temporary additional borrowing in order to process the payment.

“Officers will be doing all that is possible to minimise the period between payment of the refund and obtaining reimbursement from central government in order to keep interests costs as low as possible.

“In the main, the council’s general fund will benefit from holding receipts in advance of having to pay them over to the national pool, however, in this instance there will be a detrimental impact that is estimated to be in the order of £15,437.

“Members will be aware that revenue budgets are already extremely tight and that funding this additional cost will not be easy.”