Government accused of failing billpayers by agreeing to fixed price for 35-year contract that will cost £30bn

MPs have accused the government of failing to protect consumers over the price it has promised to pay for power from the Hinkley Point C nuclear plant.

The Commons public accounts committee said the subsidy contract for Hinkley Point C, agreed in 2016 after years of delays, would hit poorest households hardest.

The power station is expected to cost billpayers £30bn over the lengthy of the 35-year contract, adding £10-£15 to the average household energy bill.

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But an assessment by the committee concluded that no one in Whitehall was championing consumers’ interests during negotiations with French company EDF Energy.

The final bill for consumers was exacerbated by government not renegotiating the guaranteed power price for fear that EDF and its Chinese partner CGN would walk away from the project, which the MPs said was a questionable assumption.

Officials agreed a price of £92.50 per megawatt hour in 2013 but fossil fuel price projections fell between then and the contract being signed in 2016, pushing the cost to consumers up fivefold from £6bn to £30bn.

At the time the Department of Energy and Climate Change – now the Department for Business, Energy and Industrial Strategy – did not consider a ceiling on the guaranteed price, the MPs were told.

Meg Hillier, chair of the group of MPs, said: “Billpayers have been dealt a bad hand by the government in its approach to this project.”

The criticism from the committee follows a damning report by the UK’s spending watchdog, the NAO, which found the contract for Hinkley had locked consumers into a “risky and expensive project”.

The NAO attacked the government for failing to explore alternative financing models, such as taking stake in the project, a criticism that the MPs echoed.

The public accounts committee said it was also disappointed that the government appeared to have no plan in place to maximise the wider benefits of the project, beyond the clean power it will provide.

“The department does not know to what extent UK workers and companies will benefit from Hinkley Point C and the wider follow-on new nuclear programme, and has no plan in place to show how it will maximise the wider benefits of the project,” the report said.

A BEIS spokeswoman said: “The government negotiated a competitive deal for the construction of the first new nuclear power station in a generation as part of our energy mix, which ensures consumers won’t pay a penny for any construction overruns and until the station generates electricity in 2025.”

The MPs urged the government to publish a plan B for keeping the lights on, in the event the power station does not come online in 2025 as planned. EDF has already warned that the plant could be completed 15 months late.

French, Japanese and Chinese developers hope to secure financial incentives from the UK to build other new nuclear power plants, but the MPs said the government should re-evaluate the strategic case before going ahead with more projects.

“The government made some grave strategic errors here and must now explain what it will do to ensure these are not repeated,” said Hillier of the Hinkley contract.

EDF defended the deal and said Hinkley would help cut costs for other future nuclear power stations, such as the one it hopes to build at Sizewell in Suffolk.

A spokesman said: “The agreed price is lower than 80% of other low carbon capacity contracted so far and the project has restarted UK nuclear construction after a quarter century. Construction is fully under way and is already delivering a huge benefit to British jobs, skills and industrial strategy.”

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