In 2016 the Government finalised a deal with NNB Generation to construct a new nuclear power station at Hinkley in Somerset. The estimated construction cost was £18billion.
In its June 2017 report on Hinkley Point C, the National Audit Office concluded that it would be impossible to know for decades whether building the power station will represent good value for money for UK taxpayers.
The report raised concerns about the 'contract for difference' pricing structure agreed between the Government and NNB Generation. The contract means that NNB Generation will receive a strike price of £92.50 per megawatt hour for the first 35 years of production. With the price of offshore wind and carbon-based fuels in decline, there is concern that the Government has locked consumers into an expensive and risky project with uncertain economic benefits.
Other concerns include the financial health of NNB Generation’s majority shareholder EDF, and inherent risks of using new technology for the reactor. For the first time anywhere in the world the private sector is financing the entire construction phase of the project, keeping the construction of Hinkley Point C off the Government balance sheet.
The Public Accounts Committee will ask officials about the decision-making process behind agreeing the Hinkley Point C contract, how risks to the project can be managed in the future, and whether the project demonstrates good value-for-money by providing secure and affordable energy to consumers while contributing to the UK's statutory decarbonisation target.
