Quote:European commission inquiry into Hinkley Point deal could delay project

Brussels to look at UK state aid for nuclear power plant after government offers EDF Energy a set price for 35 years

• Sean Farrell
  
• The Guardian, Monday 2 December 2013 20.18 GMT
  

EDF Energy is leading a consortium to build a plant near Hinkley Point B nuclear power station. Photograph: Matt Cardy/Getty Images

The government's deal to underwrite the £16bn Hinkley Point nuclear power station plan faces delay and possible rejection after the European commission said it was ready to launch an in-depth inquiry into the agreement.
The EU competition commissioner said Brussels was likely to investigate the deal, which guarantees a minimum power price for 35 years, to make sure it conformed with state aid rules. The commission frowns on national governments offering deals to companies that stifle competition and distort the market.
Joaquín Almunia said: "We are starting to analyse what is in the British proposal. Probably we will open a formal investigation because many people are asking the same question [whether the UK's agreement was too long]."
Energy secretary Ed Davey gave the go-ahead in October for a consortium led by France's EDF Energy to build the Hinkley Point C plant in Somerset. Its two reactors will cost £8bn each and will provide enough power to supply 7% of Britain's homes for 60 years.
Davey agreed a minimum price of £92.50 for every megawatt hour (MWh) of energy that Hinkley Point generates almost twice the current wholesale cost of electricity. The deal with EDF was unprecedented and made the UK the first European country to offer a set price over 35 years for a new nuclear project.
EDF laid off workers at Hinkley Point in April to cut costs when talks with the government were making slow progress. The company was said to be spending £1m a day on the project.
The government has said it is confident the deal will stand up to EU scrutiny but a formal probe could take years and cast prolonged doubt over the plan. The government has said the new plant is vital to make Britain more self-sufficient and to cut use of fossil fuels.
The UK notified the commission about the deal at the end of October. A decision on whether to investigate would normally be expected within two months but that time period could be extended.
Almunia gave no indication of how long an investigation might take but the commission sees the government's deal with EDF, Areva and China's General Nuclear Power as complex and highly novel. An investigation is therefore likely to be in-depth to investigate all aspects of the proposals.
Michael Fallon, the energy minister, said: "I have no reason to believe the commission will block it."
An investigation would look at whether the government's decision was proportionate and whether there were alternatives to offering guarantees to EDF. An inquiry is also likely to seek the views of other interested parties.
Reports in the French press said the government in Paris was monitoring the machinations around the deal closely and was worried that delays could threaten France's nuclear industry.
The government's proposals were always likely to receive attention from the commission but Almunia's comments suggest they will be subjected to intense scrutiny.
The UK wants the EU to accept that nuclear power should be given special status like renewable energy but Germany and Austria oppose such a move and Hinkley Point is likely to be considered like any other state aid case.
Moves by the commission to block or radically alter the nuclear deal could spark a major dispute between London and Brussels. Many Conservative MPs and constituency parties are virulently opposed to Europe's influence over UK policy and David Cameron has pledged a referendum on UK membership of the EU if the Tories win the 2015 election.
The commission is revising its guidelines on state aid and aims to finalise them next year to run for the rest of this decade.
A spokesman for the Department of Energy and Climate Change said: "We have always been clear that EDF will only be offered an investment contract if it is fair, affordable, value for money and consistent with state aid rules.
"The UK government continues to work closely with the commission on state aid. It would not be appropriate for the UK government to comment on an ongoing process or on the timescales for approval."
The government's case was dealt a blow a month ago when analysts at Liberum Capital argued that the guarantees offered to EDF could prove to be "economically insane". They said by agreeing an inflation-linked price Davey had made a huge bet the cost of fossil fuels would rocket by the time Hinkley Point starts operating in 2023.
The House of Commons' environmental audit committee has also criticised the government for refusing to admit that the Hinkley Point deal had subsidised EDF and its consortium partners.
"The government cannot escape that clear fact by talking about 'support mechanisms' and 'insurance policies' instead of 'subsidies'," the committee said in a report.
EDF declined to comment.

Quote:Sellafield executives to face MPs as nuclear clean-up bill rises over £70bn

Public accounts committee to scrutinise private consortium accused of spending cash 'like confetti'

• Terry Macalister
  
• The Guardian, Sunday 1 December 2013 20.40 GMT
  
• Jump to comments (195)
  

The huge Sellafield plant in Cumbria is regarded as the most dangerous industrial site in western Europe, not least because it houses 120 tonnes of plutonium, the largest civilian stockpile in the world. Photograph: David Moir/Reuters

The bill for cleaning up the huge Sellafield nuclear plant in Cumbria will rise even higher than its current estimated level of £70bn as operators struggle to assess the full scale of the task, according to sources close to the project.
The warning comes just days before private sector managers face a grilling from the public accounts committee, which is investigating activities at the facility.
It was hoped that the huge bill eight times the cost of staging the London Olympics would be capped at £70bn, but well-placed sources have told the Guardian that the operators are convinced they are still "not at the top" of the cost curve.
Sellafield is regarded as the most dangerous and polluted industrial site in western Europe, not least because it houses 120 tonnes of plutonium, the largest civilian stockpile in the world.
The cost of decommissioning the Calder Hall reactor plus a magnox fuel reprocessing plant at Sellafield has been rising steeply, but the biggest task comes from "ponds" and "silos" filled with old equipment and deteriorating, highly toxic waste.
Nuclear Management Partners (NMP), the private sector consortium that manages the site, declined to comment, but other sources said those engaged in the clean-up were still some way from knowing exactly what was in the storage facilities. "Record-keeping in the past was clearly not what it should have been," said one.
The soaring cost of decommissioning, along with the apparent inefficiency of NMP and the £230m of dividends it has received will come under the spotlight on Wednesday at a meeting of the public accounts committee, which is chaired by Margaret Hodge, the straight-talking MP for Barking and Dagenham.
Tom Zarges, the chairman of NMP, will be questioned alongside Tony Price, the managing director of Sellafield, and John Clarke, the chief executive of the state-owned Nuclear Decommissioning Authority (NDA), which is meant to oversee the clean-up process.
The committee has in the past been highly critical of NMP, not least for falling behind on 12 out of 14 key tasks being undertaken in Cumbria.
The senior nuclear executives will also be asked to comment on how £6m of bonuses came to be shared out among NMP bosses over three years and why the consortium paid back £100,000 in expenses that had been wrongly claimed.
The political temperature has been raised by the NDA agreeing to give a further five-year contract to NMP despite its performance being fiercely criticised by accountants in a recent report, which was not initially provided to the committee.
KPMG, working for the decommissioning authority, accused the clean-up group of overspending, failure to reach operational targets and weak leadership at the atomic complex in Cumbria.
Hodge has already said that, in the light of the critical review, it was "inexplicable" that the NDA was prepared to reward the NMP consortium, which she also accused of spending cash "like confetti".
NMP is made up of British firm Amec, American firm URS and Areva, the French engineering group, which is also engaged to help EDF of France build the nuclear plant at Hinkley Point in Somerset.
While the clean-up goes on there has been much speculation about how to deal with the plutonium, which in theory could be used to create dozens of atomic bombs if it fell into the wrong hands. Just storing this material is said to cost £80m a year and tThere are a variety of potential plans for reducing the stockpile, possibly by burning it or turning it into more fuel for reactors.
Talk of building a new mixed-oxide (Mox) fuel reprocessing plant has been undermined by a report out this summer that concluded a previous Mox facility, which closed two years ago, had left taxpayers with a £2.2bn bill rather than the healthy profit that had been promised when it was first constructed.