Last week, EDF Energy called for the incoming British Prime Minister to work with the French-owned energy generator to reduce customer bills, whilst at the same time conspiring in the longer-term to put them up.
EDF Energy, operator of the UK’s nuclear power stations, is building a new power plant at Hinkley Point C that is already many years behind schedule and way over budget. At a whopping estimated cost of £26 billion (based on 2015 prices; actually, with inflation £29 billion today), EDF Energy plans to make a return on its investment for its backers, the French Government, by making its electricity the most expensive ever generated in Britain.
An agreement signed off with the UK Government in 2016 made EDF Energy responsible for meeting the upfront costs of building the 3.2 GW plant but granted them the concession to recoup costs by charging up to an astronomical £92.50 per MW/hour for the electricity Hinkley Point C eventually produces. If electricity does not retail at that price upon commission, British electricity customers will make up the difference with a surcharge on their bills, whether they are customers of EDF or not.
Provision was also made to make this figure index-linked to inflation, meaning the price if generation were taking place today would be an incredible £106 and this can only rise.
Not surprisingly, energy experts derided the deal at the time as outrageously favourable to the generator.
Contrast this with the recent Contracts for Difference round conducted by civil servants with renewable energy generators, where some providers contracted to generate electricity through offshore wind projects for less than £40 per MW/hour.
Nuclear fission is now the most expensive means to generate electricity, is never viable without huge government subsidies, and is fraught with operational and financial risk – and so is not an attractive proposition for private investors.
That is why the UK Government is introducing the RAB (the Regulated Asset Base) model by which to pass on the costs of developing future nuclear projects onto the shoulders of the already-overburdened British electricity customer through the imposition of a new nuclear tax on bills.
The most immediate beneficiary of this arrangement will be, unsurprisingly, EDF Energy which is the government’s approved partner to build the next large-scale nuclear power plant, at Sizewell C in Suffolk.
RAB means no more financial worries for EDF Energy as the Sizewell project invariably ratchets up massive cost overruns, like its forerunner at Hinkley, as the poor suffering consumer will be made to pay them. For the customer, it represents an ever-greater burden at a time when energy bills will continue to go ever higher, and, with colder days and darker nights on the horizon, many will struggle to heat their homes.
Even customers in receipt of the lowest means-tested benefits, or older customers who will not live long enough to see the Sizewell plant built, will currently be expected to pay their share of the nuclear tax – that is why the Nuclear Free Local Authorities call it ROB, a means to fleece the poor to renumerate industry fat-cats and want to see both it and plans for new nuclear scrapped.
Councillor David Blackburn, Chair of the NFLA Steering Committee said:
The Government’s nuclear ROB tax is an outrageous additional burden on the British people who have already seen their bills go through the roof. Rather than wasting a single penny more on the over-expensive and ridiculously-slow nuclear sector, we want to see government ministers invest billions in an emergency programme to retrofit Britain’s cold and damp homes to make them affordable and efficient to light and heat and we want to see investment in a range of renewable technologies to produce the cheaper, greener energy we so desperately need at a fraction of the price and much more-quicker than any nuclear delusion.”
Councillor Blackburn also had a sideswipe at EDF Energy’s senior management, adding:
“Whilst it is commendable that Monsieur Philippe Commaret, Managing Director of Customers at EDF, has called on government for urgent action over energy pricing, can I suggest that this appears to amount to ‘bill-washing’ as it offers nothing practical to reduce customers’ pain? Rather I suggest his company follow the example show by its French parent by introducing an absolute energy price cap on the bills of British EDF customers as they have in France. There bills only went up by 4%, on the direction of the principal shareholder of the company, French President Emanuel Macron. It is time for EDF Energy to do the same by its UK customers.”
