UK Government accused of hiding nuclear power subsidy

By Laura Brown - 16 May 2011 18:28:1 GMT
UK Government accused of hiding nuclear power subsidy

Reform of the UK energy market risks being distorted by hidden subsidies being given to the nuclear industry by the Government.

The Coalition pledged to allow new nuclear power stations to be built, but assured they would not receive public subsidy.

In fact, says an influential cross party group of MPs, the government's proposed reforms could lead to windfall profits for the nuclear power and fail to attract more outside investment needed to fund a rehabilitiation of the UK's ageing energy power stations.

The Energy and Climate Change Committee accuses the government of hiding the subsidy in a ''one size fits all'' long term contract for feed in tariffs and top ups which benefit low-carbon sources.

The Committee's Chairman, Tim Yeo says, ''Ministers believe that new nuclear could play a key role in keep the lights on and meeting our climate change targets—but they don't want to own up to supporting it.''

''This is understandable given the promise they made not to subsidise nuclear, but it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face.''

''The Government must be up front about the support it is giving to nuclear and not hide subsidies in a one-size-fits-all design for long-term energy contracts.''

The UKs ageing power stations means over £100bn of investment is needed to replace energy sources and cut carbon emissions. The government's proposals for Electricity Market Reform, or EMR, are intended to give power companies an incentive to deliver clean and affordable energy.

Yet the committee of MPs argues not enough is being done to target the 'Big Six' energy companies.

''The Government must go back to the drawing board and come up with a more straightforward and coherent set of plans to reform the electricity market.

Radical reform of the wholesale energy market is needed to stop the Big Six from stitching it up, but at the moment Ministers are only tinkering at the margins.''

Image Credit: Sizewell A and B Nuclear Power Stations © Anglian Art.