Robin Pagnamenta, Energy Editor
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British families could be forced to pay up to £227 extra on their annual energy bills to help to fund a new generation of nuclear power stations under plans proposed by the French company expected to build most of them.
EDF Energy, which wants to build four reactors in Britain at a cost of about £20 billion, was accused of holding the Government to ransom last night, after an executive told The Times that none would be built unless the Government agreed to underwrite part of the cost. Speaking before a government announcement on Britain’s energy future on Monday, Humphrey Cadoux-Hudson, managing director of EDF Energy’s new nuclear business in Britain, said the nuclear programme would proceed only if the Government ensured that consumers paid more for electricity from fossil fuels, such as coal and gas, which is cheaper but produces more greenhouse gas, making nuclear more competitive.
To fix the market in favour of nuclear energy he proposed a minimum price on the permits that energy companies need to buy to emit carbon dioxide. The cost of permits was too low — at about €14 per tonne — for energy companies to be encouraged to invest in nuclear rather than gas-fired power stations, which are far cheaper and quicker to build.
He said that a price of €25-35 per tonne of carbon dioxide was necessary to make construction ofnuclear stations profitable. “A floor price for carbon is needed ... The waste product of fossil fuel generation needs to have a cost,” he said.
His intervention threatens the Government’s plan to boost the proportion of electricity generated from nuclear power, which is considered critical to Britain’s energy security as supplies of North Sea gas run out, and to meet the Government’s goal of cutting greenhouse gas emissions by 80 per cent by 2050.
The Government has pointedly refused any kind of subsidy for new nuclear power stations and is relying on private industry to finance the programme.
But Matthew Sinclair, research director at the TaxPayers’ Alliance, strongly rejected the proposals. He said: “There is no way that the Government should even think of acceding to EDF Energy’s demands for a floor price on carbon.”
Mr Sinclair claimed that the cost to British consumers would be about £4.2 billion to £5.9 billion per year, or £162 to £227 per household, and that it would hit poor and vulnerable households hardest.
Ben Ayliffe, a campaigner for Greenpeace, accused EDF of holding the Government to ransom over the new build programme. “They have got them by the short and curlies ... Even with the full resources of the French Government behind them, it seems they cannot make the economics of new nuclear stack up.”
With supplies of North Sea gas rapidly running out, on Monday the Government will disclose an approved list of sites for new nuclear plants, each of which would churn out enough electricity to power a city the size of Manchester for 60 years.
By 2015 it hopes that at least eight will be under construction, with the first, at Hinkley Point, Somerset, due to enter service in 2017.
Ed Miliband, the Energy Secretary, will offer a formal justification for the new plants to Parliament. He will also discuss new clean coal plants, wind parks and other key energy projects that the Government wants to fast-track through the planning system, using powers created last month.
This national nuclear policy statement comes amid mounting pessimism that a UN climate conference, in Copenhagen next month, will succeed in establishing a high international price for carbon dioxide emissions. This would drive greater investment in low carbon of energy, including nuclear and renewables such as wind and solar power.
A spokesman for the Department of Energy and Climate Change said that the Government had “no current plans” to introduce a floor price for carbon and said “all our efforts are towards an ambitious deal at Copenhagen”.
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