French nationalised company to benefit by £350 millio per annum from us British taxpayers

EDF Energy will bank windfall profits of an estimated £350m a year at the expense of British customers, when the Government introduces a new green tax.



By Rowena Mason

Published: 9:41PM BST 07 Aug 2010


The French-state owned utility would be the major beneficiary of Government plans to artificially raise the price of carbon allowances traded in the UK. The move is intended to make it more expensive to run fossil-fuel power stations than low-carbon nuclear plants.


Home owners failing green targets to pay more Council TaxThis will substantially raise the price of electricity, according to two separate studies from KPMG and the Policy Exchange. A carbon price of €35 (£29) per tonne leading to an increase of £7 per megawatt hour would take the entire cost for the taxpayer to £2.5bn.

EDF acknowledged in November that a minimum carbon price of €35 translates to an extra £40 a year for each of Britain's 22m households in increased energy bills – plus substantially more for industry and businesses.

Most of the extra money paid by consumers will go to the Treasury, since it collects proceeds from the sale of carbon allowances bought by gas and coal station owners.

However, EDF Energy will also be a major winner to the tune of approximately £350m because it already owns a fleet of existing nuclear power stations producing 13pc of Britain's electricity.

The company will reap the benefit of the higher electricity price, but will not have to buy carbon allowances because nuclear plants do not emit greenhouse gases.

Owners of wind farms and other renewable-energy generation will also pick up smaller windfalls.

Any windfall profits made by EDF could be banked immediately and would not have to be put towards building more stations – nor would they make the profitability of a new plants any more attractive.

EDF has been the biggest advocate for a carbon floor price, because it says that the incentive would encourage it to build new nuclear power stations.

However, critics of the policy say that it will still not be enough to make building new nuclear power more attractive than coal or gas plants.

A report by KPMG, commissioned by RWE npower, recently concluded that a carbon floor price would not be enough to encourage new nuclear.

"Market participants we consulted generally felt that a carbon floor price alone would be insufficient to achieve a positive investment decision for new nuclear. It would also provide windfall gains to existing low–carbon generation and hence may not represent best value for money."

An EDF Energy spokesman said: "Until the proposed minimum price of carbon is known and the timing, any attempt to calculate any possible benefits for low carbon plants is speculation.

"The Government has reaffirmed its commitment to its plans for a minimum carbon price as part of its energy market reforms. We support this as it will provide greater certainty for all those involved in making long-term decisions on investment in the UK's energy supply."

He added: "It is an important signal to encourage investment and help deliver the UK's targets of an 80pc reduction in carbon emissions by 2050."