The proposed EDF deal to build a nuclear reactor at Somerset’s Hinkley Point has been controversial for quite some time. The UK government came to an agreement with the Big Six utility provider in order to build the country’s very first nuclear power station. Due to be completed in 20 years, it is hoped that this will make nuclear power a major industry in Britain. Energy secretary Ed Davey claimed that it would also cause customer energy bills to fall by 2030.
The decision was criticised by many members of the Labour party. The shadow energy secretary, Caroline Flint, said that it contradicted the government imposed green subsidies that are pushing up electricity prices and caused the Conservative Party to reject a 20-month imposed freeze on energy prices.
David Cameron is now in the ridiculous position of saying that they can set prices 35 years ahead for the companies producing nuclear power, while insisting they can’t freeze prices for 20 months for consumers while much-needed reforms are put in place.
Now there are new fears of an economic nature. Some are speculating that the decision to allow EDF to build a nuclear reactor in Somerset is a risky economic gamble. The Guardian’s Tom Burke said that it requires EDF to build it on time and to a decent budget – something they have not be able to do before.
As the government has guaranteed the price that the provider will receive for the electricity it will produce — £92.50 per hour — it’s also running the risk that electricity prices will not double. If it does not, the government will owe EDF even more money coming out of the pocket of taxpayers.
These fears have been fuelled by a recent report by Moody’s which states that wholesale electricity prices have fallen by close to 50 per cent since 2011. It also suspects that the prices will not go much higher between now and 2020.
David Cameron said it was an important day for the UK when the deal with EDF was announced. He said:
This is a very big day for our country: the first time we’ve built a new nuclear power station for a very long time.
He also pointed towards the fact that the erection of a nuclear power plant would lead to a great many British jobs. He said it was:
…kick-starting again this industry, providing thousands of jobs and providing long-term, safe and secure supplies of electricity far into the future.