Consumers may foot nuclear bill
Energy firms demand guarantees on investment from ministers
John Vidal, environment editor, The Guardian , Monday January 7 2008
Consumers may face higher electricity bills to cover the future decommissioning costs of a new generation of nuclear power stations to be announced this week, the Guardian has learned.
Ministers have met several electricity firms known to be interested in building up to 10 new stations and they are understood to have demanded long term commitments to guarantee their investments - expected to be about £10bn a station.
Energy secretary John Hutton is to announce the government's decision on the proposed nuclear programme this week.
It is understood that plans have been agreed for the government to collect a fee from the companies for each unit of electricity used in British homes to build up a fund to meet decommissioning costs. It is expected this extra fee will be passed on to consumers in the form of higher bills.
Despite government assurances that the public sector would not be asked to pay for the new reactors, this also raises the prospect that if the fund did not cover the full decommissioning costs, the shortfall - which could run into billions - would be paid by the taxpayer.
Government sources also suggest that any firms offering to build new nuclear reactors will not be asked to pay the full cost of storing the hundreds of thousands of tonnes of highly radioactive waste they produce. Instead, they will be allowed to "rent" space in a giant nuclear waste vault to be built by the government, so avoiding massive construction costs.
The companies have also demanded a government guarantee on a minimum price of carbon over the lifetime of the stations - possibly up to 50 years.
With the cost of carbon high, nuclear energy has an edge over fossil fuels under the nascent EU emissions trading scheme, but were it to collapse the long term viability of nuclear would be threatened.
Yesterday, a spokesman for EDF, the French state-owned company which has offered to build four reactors in Britain , said the company had been in talks with the UK government about guaranteeing a minimum carbon price on the EU emissions trading scheme. This was important, he said, because the price of carbon partly determined the cost of the electricity provided and the guarantee would make it easier to raise money.
It is understood that the government would not be obliged to pay out any money unless the carbon price collapsed.
"It's not a subsidy, or a long term guarantee, but the EU carbon trading scheme does not quite work yet . We can see how it works for the next five years but not after that. We have a 60 year operating life," the spokesman said.
The taxpayer will also foot the bill of nearly £1bn to compensate the community eventually chosen to host the permanent nuclear waste repository, as well as the cost of security at potential sites, the transport of waste and the extra cost of any required increase in the size of transmission lines for the national grid.
Ministers have consistently said that any new generation of nuclear power stations would be built by the private sector without public subsidies. Instead, nuclear opponents accuse the government of trying to smooth the financial path for prospective nuclear companies.
No nuclear power stations have been built in Britain for nearly 20 years, largely because banks have been unprepared to risk money on an industry that has consistently needed to be rescued from near bankruptcy. The National Audit Office says the government has been left with liabilities of up to £5.1bn since the virtual collapse of nuclear company British Energy, as well as £70bn in existing waste.
A spokesman for the Department for Business, Enterprise and Regulatory Reform said: "If we were to allow a new generation of nuclear stations ... the private sector would have to pay the cost of any clean up and waste during the lifetime of the reactors."