nuclear-news

UK’s new nuclear plan will dramatically increase electricity costs

Electricity From New UK Nuclear Plant To Be Linked to Inflation WSJ, By SELINA WILLIAMS AND GERALDINE AMIEL, 18 June 13,  The U.K. government has agreed that the guaranteed fixed price for electricity from a new nuclear power plant that Electricite de France SA EDF.FR +0.30% (EDF.FR) wants to build would be fully linked to inflation, said people familiar with the matter, a move that would add tens of billions of pounds to the total cost of electricity from the reactors.

The agreement to inflation-link the electricity price EDF would receive–known as the strike price–for 35 years substantially eases the financial risks for the French utility for constructing two nuclear reactors, but there is still no deal on the actual price, the people said.

The whole nuclear plant is estimated to cost around 14 billion pounds ($22 billion) to build.

EDF, the world’s largest nuclear operator, seeks a strike price between GBP95 to GBP100 per megawatt hour of electricity while the government would rather settle around GBP80 to GBP85 per megawatt hour, one of the people said. The current wholesale electricity price is around GBP48/MWh. The talks are expected to continue for several weeks, the person said.

Whether EDF and the U.K. can reach an agreement is seen as a litmus test for nuclear energy and its economic viability in Europe……

The agreement links the strike price, which amounts to an indirect subsidy for nuclear power, to an inflation measure called the consumer price index, one of the people said. This would dramatically increase the costs to taxpayers, said Roland Vetter, head of research at CF Partners, an environment and energy advisory, trading and investment
firm.

“Indexation is important because it will increase the subsidies every year in line with inflation and the public therefore will carry thelong-term inflation risk in their electricity bills,…… http://online.wsj.com/article/SB10001424127887323566804578553030018924570.html?mod=googlenews_wsj

June 19, 2013 - Posted by Christina Macpherson | business and costs, politics, UK