Open letter raises concerns over government nuclear secrecy
A group of MPs, academics and NGOs signed an open letter this weekend calling on the National Audit Office to investigate government negotiations over building new nuclear power plants. The letter raises concerns that the government could be striking a bad deal for UK behind closed doors.
The government is currently locked in talks with French energy giant EDF about building two generators at Hinkley Point in Somerset as it tries to turn plans to build 16 gigawatts of new nuclear into a reality.
The letter’s signatories include eight MPs, and they say the deal needs to be more transparent to ensure the best value for the taxpayer.
Value for money
Government negotiations with EDF reportedly reached a “critical” point last month. The deal hangs on agreeing a guaranteed ‘strike price’ the company will be paid for electricity from the new plants.
There is a wide-range of estimates of what price EDF are after. The Guardian has reported on the government’s efforts to keep the price below a ” politically crucial” £100 per megawatt hour, with one signatory of the letter suggesting this would mean a subsidy of up to £250 billion over 40 years.
The Department for Energy and Climate Change (DECC) isn’t particularly forthcoming on the details, telling us contracts “will only be offered to EDF if the deal is fair, affordable and value for money”.
But the signatories to the letter – published in the Telegraph this weekend – aren’t convinced this is the case. We spoke with a range of the signatories to find out more about their concerns. It’s fair to say they’re generally not keen on nuclear power. Professor of politics at the University of Manchester, Erik Swyngedouw, tells us nuclear energy is simply “not cost-effective in market terms”. He says it can only be part of the UK’s future electricity generation “if the public is prepared to take on a significant part of the total cost.”
Signing up to nuclear could also mean other energy policies lose out in the long-run – which another of the letter’s signatories, energy consultant Tom Burke, says is a particular “strategic concern”. He says the deal could lock the UK into relying on electricity from fossil fuels, rather than investing to upgrade the grid to deal with intermittent electricity from renewable sources such as wind power.
Renewables could also be forced off a “fiscal cliff” by the nuclear contracts, according to one of the letter’s main authors, Professor Paul Dorfman of the University College London’s Energy Institute. He says it’s unclear how much of the money for the nuclear deal will fall under the government’s levy control framework – which limits government spending on low carbon energy. He says that if it’s a lot, he “can’t see how there will be any money left for renewables” by 2022.
This means the government is taking the UK into a “completely, absurdly, irrational cul-de-sac”, according to Professor Brian Wynne, of the University of Lancaster’s Centre for the Study of Environmental Change, who also signed the letter. He told us that,
“the UK government is obsessed in a starkly irrational way with having nuclear new-build come-what-may, and is being blinded to the viability indeed preferability, in economic, social, and environmental (including climate) ways, of alternative energy policies and strategies.”
Even those who are more enthusiastic about nuclear power are concerned. Tony Lodge, an energy policy analyst at the thinktank the Centre for Policy Studies, has previously encouraged the government to move faster to secure new nuclear investment. But he says negotiations are now at a stage where it is unlikely the consumer will get a good deal, telling us “the minute these things become political, we’re in trouble”. The government is now simply aiming to get a price which it can “hail as a success”, he says, compared to the high figures currently being reported in the media.
DECC disagrees. Secretary of State for Energy Ed Davey told Newsnight last week the government actually has “a strong negotiating hand”. He said that “actually, nuclear isn’t critical” to the government’s immediate plans as:
“over the next few years we’re looking at major investment in renewables and we’re looking at gas taking up the slack as well. As well actually better use of demand, reducing our needs for using too much electricity and energy.”
Lack of transparency
It’s not just the value for money aspect of the deal which worries the letter’s signatories, it’s also the way the deal is being done. The letter says there is a “lack of transparency” around the talks which mean the deal doesn’t have “necessary democratic accountability”.
The letter points out that the nuclear contracts are defined as ‘non-reviewable’ – leading to concerns that the UK could be locked-in to a bad deal. But DECC says “the terms of any contracts offered to developers of low carbon electricity, including new nuclear developers, and details will be laid before the UK Parliament” during debates on the energy bill – so MPs will know what they’re letting themselves in for.
Davey echoed this position on Newsnight last Wednesday, when he said:
“When we have struck the deal, we’ve committed to have the most transparent process in nuclear history where we will publish the price, we will publish the duration, we will publish the terms and conditions to parliament and the media”.
A clause in the draft energy bill allows the Secretary of State to renegotiate the deal in later years without involving parliament – leaving MPs powerless to stop what they might consider a bad deal later down the line.
Paul Dorfman says the energy bill has been “drafted with intentional obscurity” on this point, giving the Secretary of State “extraordinary powers” to renegotiate the contracts without parliament’s input. And Professor Swyngedouw says the non-reviewable nature of the contracts shows nuclear power “relies fundamentally on obscuring the role of public funding”.
We asked EDF about the letter. It responded by pointing us back to a previous statement it made on the negotiations, maintaining that when the final deal is announced “it will show in a transparent way that new nuclear is competitive with all other forms of low carbon energy, and good value for consumers”.
Next steps
Meanwhile, Dorfman says another letter has also been sent directly to the National Audit Office – signed by key MPs from all parties – which asks them “to do their job” and check the deal.
The signatories also intend to ask a number of parliamentary committees to investigate their concerns. Such processes will (presumably) be another stumbling block on the government’s path to securing the UK’s nuclear future.