Nuclear Power Plant 'Strike Price' Agreed

A deal to build Britain's first nuclear power plant in a generation is expected to be announced today.

The Government has been negotiating with French-owned EDF Energy for more than a year over two new plants which will be built at Hinkley Point in Somerset.

But ministers are now understood to have agreed on the crucial 'strike price' which will give EDF a guaranteed rate for producing low-carbon electricity, raising concerns that this will hike up energy bills.

If wholesale prices drop below the strike price, investors who financed the project will be compensated. If prices rise above that level, EDF will pay the difference back to consumers.

The 'strike price' gives EDF a guaranteed rate for producing electricity

The two reactors proposed for Hinkley are a key part of the coalition's drive to shift the UK away from fossil fuels towards low-carbon power.

Energy policy has shot up the agenda since the party conference season, when Labour leader Ed Miliband pledged to freeze retail prices for 20 months.

Chancellor George Osborne removed another obstacle last week when he announced that Chinese firms will be allowed to invest in civil nuclear projects in the UK - even potentially taking a majority stake.

The funding agreement will almost certainly mean that the new reactor at Hinkley will be a mirror image of the Taishan plant in China.

Ed Miliband and George Osborne weighed into the energy debate last week

During a visit to the Taishan plant last week, Mr Osborne said: "It is an important potential part of the Government's plan for developing the next generation of nuclear power in Britain.

"It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers".

But anti-nuclear activists living near the site say they have been misled by the decision process to site the plant at Hinkley.

Anti-nuclear campaigner, Theo Simon

Campaigner Theo Simon told Sky News: "We were told it would mean lower energy bills but actually the announcement of the strike price is really the last nail in the coffin of this project.

"We were told that it would provide cheap energy; we were told it would help us to bridge the energy gap in the early 2000s, and now it seems it wont be built 2025 and we will all be paying for the profits of EDF and Chinese nuclear corporations for the next 40 years."

The issue of prices has become even more controversial with the Big Six power firms unveiling hikes of more than 9% in electricity and gas prices.

Deputy Prime Minister Nick Clegg has raised concerns about the increases, telling Sky News' Murnaghan programme that the energy firms needed to justify prices increases.

"Clearly the companies need to justify the bill increases that they are now announcing," he said.

"It cannot be right that people who are really struggling - many, many people still struggling to pay their weekly, their monthly bills, where electricity and gas bills for this winter are a looming worry.

"It can't be right that those bills are increased for those households in our country and yet it is all rather opaque about what drives these increases."

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