By Bob Duncan 
UK government plans to massively increase domestic energy bills, in order to subsidise the building of a new generation of nuclear power stations, have been described as “illegal” by the government’s own UK commercial partner.
The plans were announced in the draft Energy Bill on Tuesday and describe a scheme where ‘letters of comfort’ would be given to commercial partners, guaranteeing a minimum price for nuclear generated electricity. This would then be replaced by a full subsidy scheme in 2014.
Centrica, who are in a consortium with French firm EDF Energy to construct and maintain the new nuclear stations, have told UK ministers that the scheme would break EU regulations on state aid.
Westminster has commissioned international law firm, Slaughter and May, in a bid to reassure the industry that their plans are legal.
It is anticipated within the industry that Centrica may now pull out of the consortium. It has been also reported that Centrica’s partner, EDF, may also be about to abandon its nuclear plans in the UK in order to concentrate on France’s renewables programme.
Either move would be a significant blow the UK Government’s nuclear policy, and could kill it of altogether.
The draft Energy Bill has also been widely condemned for its insistence on the need to build new nuclear power stations instead of concentrating on energy efficiency and renewables.
Friends of the Earth Senior Energy Campaigner Paul Steedman criticised the Coalition’s plans and said:
“The Government needs to stop obsessing over a way to make the sums for nuclear power add up, stop our homes leaking heat and switch the country from dirty gas to clean British energy from wind, sun and water to help hard-pressed households with their bills.
“After 18 months of dithering, this Bill doesn’t even set out a clear purpose, when it should make a simple commitment to decarbonising our electricity supply by 2030.”
He added:
“All the Bill contains is a desperate attempt to prop up the dying nuclear industry and a way of letting in dirty gas by the back door, even though soaring gas prices have led to rocketing bills. More gas and new nukes will only add to bill payers’ pain.
“The Government should listen to 85% of people and support clean British energy from our wind, sun and water, as well as cutting energy waste. This would kick start our struggling economy by creating thousands of jobs, give much-needed relief to customers struggling with fuel bills, and boost the Government’s green credentials.”
The Westminster policy is completely out of step with other European governments, such as those of France and Germany, which are moving away from nuclear power towards renewable sources of electricity. This process has speeded up since the disaster at the Fukushima plant in Japan.
The SNP Government in Scotland has already refused to sanction the building of any new nuclear power plants north of the border, and intends to close all of the existing nuclear stations once they reach the end of their productive life.
Mike Weir MP, SNP spokesperson on Energy and Climate Change expressed concern at the UK Government’s continued obsession with new nuclear power stations, saying:
“This intervention from Centrica is further evidence that nuclear power is not the way forward – I hope this moves the UK Government away from their obsession with new nuclear.
“The proposed ‘Contracts for Difference’ are plainly a subsidy for nuclear, despite the fact that the industry has swallowed billions of pounds of public money over many years. If the promoters of new nuclear are so sure it is viable then they would not need such a mechanism, which should be aimed solely at new and emerging renewable technologies.
“Now all of the companies who were at the forefront of new nuclear have now pulled out or seem ready to do so, with RWE announcing considerable investment in renewables instead. New nuclear has no place in future energy policy. The UK Government should concentrate on investment in new renewable technologies for a cleaner, greener energy future.”
Referring to the recent statement by OFGEN, which was “announced” on the same day as the local elections in Scotland, and which confirmed that renewable generators would be charged fees for distribution, proportional to their distance from the population centres of South Eastern England, Mr, Weir said:
“One thing that is completely missing from the Draft Energy Bill is any mention of the continuing problem of the transmission charging regime which punishes new renewables in the north of Scotland. The UK Government need to grasp this nettle and ensure the regime helps rather than hinders the development of new renewable energy.”
Three companies, E.on, RWE and SSE have recently pulled out of the bid to build a new generation of nuclear power stations in England. Each company cited the escalating cost, and the long lead time necessary before a profit can be generated.
The moves followed a statement by EDF Energy that predicted costs to build each station had risen by over 40% from £10 billion to over £14 billion, making new nuclear the most expensive energy source there is, even when the costs of decommissioning are excluded.
The Scottish Government has set the most ambitious renewable plans in the world and is on target to achieve their aim of 100% renewable energy equivalent by 2020. They want to use Scotland’s vast renewable energy potential to ‘re-industrialise’ the country. The renewable industry already supports more than 11,000 Scottish jobs.