Thursday, 20 November 2014

The real secret letter from the Treasury about disastrous Hinkley C is revealed

Hot on the heels of news of further escalations of delays (and thus)  costs for EPRs being built in Finland and France there is news that the Treasury is conducting a 'secret' review of the EPR project that is scheduled to be built at Hinkley C.


This is more pantomime nonsense broadly similar to all the facile Parliamentary deliberations about whether the £92.50 per MWh price to be paid over 35 years with a £10 billion Treasury loan guarantee is 'value for money'.....not to mention the EU Commission's irrelevant statements about 'protecting' UK consumers by saying that the developers should return money if the project ends up costing less than projected.

Costing less than projected! Costing no more than £92.50 per MWh over 35 years! And this £10 billion Treasury loan guarantee being just a notional sum that the UK consumers will not have to pay out!

All nonsense! It is isn't even self-deluding any more. The Treasury will now know full well that the only way the project will be built is if the Government gives full underwriting of all and effectively any costs involved in the project. Whether or not they admit or agree formally to that happening now is irrelevant, it is what will end up happening to get the plant finally built. The electricity consumer will be made to pay out far beyond the nominal prices so far agreed (see previous posts on this). The nominal price tag (£92.50 per MWh etc) mentioned in the Government's press releases is a fig leaf to hide the fact that the real price, costed on a commercial basis will be much, much, higher. As I have said in the past, in reality the project would be priced at being higher than that of an offshore wind project if it was costed using comparable criteria.

The Treasury, who actually have some financial analysts who have at least a passing grasp of energy economics and the realities of nuclear power economics, know full well that the Hinkley C scheme is a slow moving car crash.The latest leaked piece of news that there is a 'secret' review (if it was secret, why is it being announced to the press?) is merely another piece of apologia, a part of a cover story that will be reserved for roll-out in front of an inquiry some years later into what went wrong with the Hinkley C project. No doubt this inquiry will declare that there was good will on all sides, just a few well meaning mistakes made, and that the next nuclear project will work out as cheap as chips!

What is the 'real' secret letter likely to be from the Treasury:

'Dear Ed,

Given the worsening prospects for the Hinkley C prospect, including the virtual bankruptcy of constructors AREVA, the political meltdown surrounding EDF and the near certainty that the Hinkley C project will turn out to be much more expensive that even the price we have agreed, we do feel it is necessary somehow to signal that we have not been totally stupid in not noticing the sheer insanity of this project. For our part we want to emphasise that we are only going along with this project because of pressure from Number 10 to satisfy political pressure that 'nuclear power must be built', We also understand that you would prefer not to have to take responsibility for this fiasco, but you also know that your job depends on keeping up appearances about the project. So, we can circulate a story that we are conducting a 'secret' review into the project. This will demonstrate our concern, but allow some cover for us when the inquiry is organised in a few years time over how the project turned out to be so big a turkey without anybody in government appearing to notice.

We can all blame pressure from the PM's office to ensure that the deal was made for Hinkley C when that happens. Hinkley C construction is likely to begin to have problems before DC leaves office in 2019 or whatever, but the inquiry about the failures will take longer to appoint, and even longer to report, so he will be safely retired by the time blame is apportioned for the catastrophe. He can blame the French anyway.

It is still a shame, though, that it is the British electricity consumer who will have to pay out the countless billions of pounds of costs for overruns until probably at least the 2060s to get the power stations completed. But at least the money will not be available to spend on all of those awfully ugly wind and solar farms that your erstwhile green friends are so keen on !

Best Wishes,


No comments:

Post a Comment