Hinkley Point nuclear power station deal announced: Politics live blog

Ed Davey's Commons statement is now over.

I'll post a summary shortly.

Ben Gummer, a Conservative, asks if EDF will go ahead with the proposed Sizewell C nuclear power station.

Davey says EDF has been focusing on Hinkley Point. Once the Hinkley Point deal is finalised, it may be able to focus more on the Sizewell C opportunity. It might be able to come up with a proposal a bit more quickly because of the work already done on Hinkley Point, he says. But a decision on Sizewell C is not expected until "towards the end of this decade", he says.

A Labour MP asks how Davey can know what the clean-up costs will be when a site for the long-term disposal of nuclear waste has not even been identified yet.

Davey says EDF will have to set money aside from day one. The plant will last for 60 years, and so, because the money adds up over time, the annual costs can be kept low. It's like a pension fund, he says. If you start early, it is cheaper.

Phillip Lee, a Conservative, says he has some national security concerns about the Chinese being involved in our nuclear power stations. Would a British firm be allowed to run a Chinese nuclear power station?

Davey says George Osborne has signed a deal with the Chinese to open up their markets to the British.

Mike Weatherley, a Conservative, says he has "grave concerns" about today's announcement, particularly because of the cost of decommissioning nuclear power stations.

Davey says what is different about this deal is that it requires EDF to set money aside for clean-up costs.

Labour's Meg Hillier asks Davey if he is still telling her constituents to put a jumper on if they get cold at home.

Davey says Hiller demeans herself because he did not say that on Newsnight.

(Davey has a point. The BBC's Chris Mason wrote a good piece explaining how Davey was misrepresented.)

Sir Tony Baldry, a Conservative, asks Davey to confirm that the Hinkley Point C strike price is lower than for offshore or onshore win.

Davey says he is right about offshore wind. But the price on onshore wind is coming down, and becoming competitive, he says.

Gerald Howarth, a Conservative, says he welcomes Davey's conversion to nuclear power.

Davey says he hopes that Howarth and other Conservatives will recognise why Davey changed his mind. It was because of the threat from climate change, he says.

I've found the NAO's Hinkley Point C statement. Here it is.

Hinkley Point C is due to be the first nuclear power plant built in the United Kingdom since Sizewell B, which was completed in 1995. The UK government has agreed the key commercial terms for a deal with EDF Group, the project promoters, including the price that it will receive for the power generated by the plant over 35 years from the date of its commissioning, known as the “strike price”. The proposed contract will be subject to State Aid approval, Royal Assent for the Energy Bill and agreement on financing.

It is not the NAO’s role to question the merits of the Government’s policy objectives or to be part of the government’s executive decision-making in regard to the proposed contract. Our work will cover the Department’s commercial approach to securing this deal and the proposed terms of the contract, to report to Parliament on value for money and the resulting risks which the Department must manage. We will also wish to identify lessons learned to inform decisions on future contracts for difference.

Ed Davey says the Lib Dems changed their stance on nuclear power at their conference in Glasgow. They agreed to support it in some circumstances for the same reason he did personally, he says; the need to hit decarbonisation targets made nuclear power more attractive than in the past.

Caroline Lucas, the Green MP, asks if Davey will agree to full examination of the terms by the National Audit Office.

And can Davey confirm that, if waste disposal costs rise above what was expected, the taxpayer will have to foot the bill.

Davey says the NAO has put out a press release today saying it will be looking at this contract.

And the taxpayer is paying for nuclear waste disposal. It is paying to dispose of the nuclear waste generated under Labour. This contract is different because, for the first time, it obliges a producer to pay the clean-up costs, he says.

(I can't find that news release on the NAO website yet.)

Adrian Bailey , the Labour MP, asks what is being do to maximise the potential of the project to create jopbs for British firms.

Davey says 57% of the jobs will go to British firms. The government would have liked that figure to be higher. But Britain's nuclear capacity was run down under Labour, he suggests.

Ian Liddell-Grainger, the Conservative MP whose constituency covers Hinkley Point, says this is a very good day for British industry. 

Davey is responding to Greatrix.

He says many people expected the government to agree a strike price of £100 per megawatt hour, or £95. But the government did much better than that, he says. It got it below £90.

On community benefit, he says the government is due to respond to a select committee that has made recommendations on this. But EDF has already said that £100m a year will go into the local community while construction is taking place, he says.

He says Greatrix tried to use today's announcement to justify Labour's "price fix con".

Greatrix should know that, even if part of costs are fixed, the other part of costs are variable. Firms need to be allowed to vary prices to avoid going bust. It is worrying that Labour do not understand this.

Labour's Tom Greatrex is replying for the opposition. He says Caroline Flint, the shadow energy secretary, is not here because severe power shortages have held up the trains from her Don Valley constituency.

How was the strike price arrived at?

If there are any changes to the contract, will parliament get a vote?

Is Davey satisfied that arrangements are in hand to store nuclear waste from Hinkley Point C?

Will the community benefit rules be changed so the local community benefits while the new power station is being built, not just when it is running?

Greatrex also asks Davey to accept that, if the government can agree an energy price for 35 years, Labour was entitled to propose a price freeze for 20 months.

Davey says he respects people who opposed nuclear power on principle.

He had concerns on this front himself, he says, as did his party.

But now he is satisfied that the safety and legacy issues (ie, what do to with nuclear waste) are "manageable".

Davey says Hinkley Point C will be the first nuclear power station built under the "contracts for difference (CfDs)" scheme set in place by the energy bill.

CfDs offer low-carbon providers predictable future revenues, he says.

The Hinkley Point CfD would last for 35 years. That is 60% of the 60-year operating life of the plant, he says. That is proportionally similar to the CfDs offered for other renewable technologies.

Under CfD, energy producers are guaranteed a minimum price. This is the "strike price".

(This CfD framework is what Davey was referring to when he told the press conference that Britain's electricity reforms were "incredibly radical" - see 2.53pm.)

Ed Davey is making his statement now.

If you've been following this blog all day, you will probably have a clear idea of what he has been saying about this already. I'll just report anything new.

The real interest in this session will lie in what backbenchers have to say.

Ed Davey has addressed the broadcasters, and he's hosted a press conference.

Now he is about to tell parliament about Hinkley Point C.

(MPs won't like that. They are quite attached to the idea that the House of Commons should hear these things first.)

The SNP government in Scotland is opposed to the idea of building new nuclear power stations and can block them being built north of the border. This is from Fergus Ewing, Scotland's energy minister.

This UK Government's misguided enthusiasm for nuclear comes at a time when other countries, such as Germany and EDF's home nation France, are either eliminating or scaling back their dependence on nuclear generation and when we should be putting the support to our renewables energy industry and the jobs it will support across the country.

The guarantee of support and subsidy under this contract [Hinkley Point C] until after the middle of this century also sits in sharp contrast with the lack of a UK Government commitment to support our offshore renewables sector and its potential beyond 2020.

The Scottish Government has an ambitious but achievable target to generate the equivalent of 100% of electricity from renewable sources by 2020, alongside generation from thermal sources fitted with carbon capture and storage.

Nuclear energy cannot be relied on for our energy needs. The output from Scottish nuclear generation fell to historic lows in 2006 and 2007 due to unplanned outages. Although output has increased since then, nuclear generation has not yet recovered to its pre-2006 levels.

This underlines the susceptibility of nuclear to sudden interruptions, and supports the Scottish Government's drive towards a balanced energy portfolio, based on cleaner thermal generation and the advantages which our huge renewables potential offers to Scotland.

While the press conference was going on, DECC put out a statement from Ed Davey about the npower price increase.

This is another disappointing announcement from a big energy company. Some of the Big 6 seem not to have noticed that they are no longer alone in the market – there are now 15 small suppliers, and some really competitive fixed deals out there.

Today I’m publishing hard figures on the costs energy companies really face in delivering the Energy Company Obligation (ECO), so consumers can see what this scheme is really costing energy companies.

These figures – supplied by the energy companies themselves – show that the costs are in line with previous schemes so there should be no need for any increase to consumer bills due to ECO.

The ECO is a scheme launched this year funding energy savings measures for poor households. Here is the five-page DECC paper about ECO costs (pdf). It says the figures suggest that "customers pay an average of around £50 per annum to fund ECO.". But DECC says that this is "broadly in line" with what customers had to pay to fund the predecessor schemes and that this means ECO is not to blame for bills going up. 

The press conference is now over.

Here are some more snippets that Fiona Harvey has sent me. Think of them as email tweets. Apparently her Twitter was not working.

EDF and govt seem to disagree on how many homes can be powered by HPC - 5m says EDF, 6m says DECC. Both agree won't be will 2023.

Did Henri Proglio really call UK energy policy "tragic"? Extraordinary from head of French state owned co!

57pc of value of contracts to UK - that's a max, VdeR makes clear. So that's as far as UK industry can hope to benefit.

Lord Deben[aka John Gummer, chair of the committee on climate change] namechecked by VdeR. Says played key role. That sounds interesting.

More from Davey on gas - says could go up a lot, or "an awful lot". Clear blue water between him and Tory partners over gas?

Davey has said nuke will not get special treatment under subsidy. It will be a low carbon subsidy. Is this admission that this is a subsidy?

Combative question on bill increases batted away by VdeR who says now is "not the moment". Understandable as they need to get the strike price out. But with Npower announcing 10pc increase today, the "moment" for EDF to unveil its increase must come soon.

The final question is about prices.

Vincent de Rivaz says he does not want to talk about energy bills today. No decision has been taken yet about whether EDF is going to put up its prices. If it does decide to do that, the firm will come back to explain why, he says.

Q: [To Davey] If a future government changes its mind, how will EDF be compensated. Will the loss of future profits be included?

Davey says the government should not over-compensate. But it should offer EDF a fair deal. He thinks they have got a fair agreement.

The full contract has not been published yet. When full details are revealed, people will be able to see what is proposed.

Q: How confident are you this will get state aid clearance from the EU?

Davey says so far discussions have gone well with the European Commission. But you can never pre-judge these things, he says.

Q: How confident are you that you can deliver this on time and on budget, particularly given previous problems with the EPR model?

Henri Proglio, the EDF chairman, says EDF is confident about the EPR model.

Q: How can you be confident that this will save customers £77?

Davey says he cannot guarantee that. There are "huge amounts of uncertainty" here. The energy world if full of uncertainties. What will happen to the cost of gas or off-shore wind? Will carbon capture and storage work? But the government must make allowance for these uncertainties. 

Britain's electricity market reforms are "incredibly radical", he says. Britain is building the world's first low-carbon energy market.

Davey said that if a future government wants to cancel Hinkley Point C, it will have to pay a penalty to EDF. Fiona Harvey points out to me that that could be seen as locking a future government in to high prices.

Q: What do you expect to happen to gas prices by 2023?

Davey says DECC has a variety of forecasts. 

To meet the government's decarbonisation target, this is a good approach.

Q: Will the same strike price apply to Sizewell C?

Davey says the Sizewell C negotiations are not identical. The government will be looking for an even lower strike price for that deal, he says.

Q: What are the penalties if EDF does not complete the plant by 2023?

Davey says the penalty is that EDF won't get any money. It does not recoup money on its investment until it starts producing energy, he says.

Fiona Harvey has sent me this from the press conference room.

Room packed with French cameramen.

Key facts EDF eager to impress on us before conference starts: 2 new reactor will supply 7pc of UK electricity. Will operate for 60 years. Just over half - 57pc - of construction work "could" be supplied in the UK. This is the muckshifting that EDF's head of procurement told the Guardian about last week. Crucially, these are not the high value jobs - the phrase "muckshifting" says everything about how EDF and its Chinese partners view the value of the UK's contribution to this project. But it will be UK energy bill payers who fund the whole thing, and pay for the waste after.EDF expects to make a 10pc return on its investment - handsome profits, in this age of austerity.

Q: [To Davey] You are supposed to be keeping energy bills down. But you have just committed to paying double the market price to EDF. Won't that lower us into higher prices.

Davey says the cost of Hinkley Point C won't touch customer bills until 2023.

By 2023 we will be in a different world, he says. If Britain was just relying then on gas, that really would be risky.

Wholesale gas prices have gone up by 50% in recent years, he says.

By 2030 the average consumer bill will be £77 lower than it would have been without nuclear if this goes ahead, he says.

Q: German prices have come down in recent months. Are we locked in to higher prices?

Davey says Germany has far more renewables.

In the UK, when the coalition came to power, only Malta and Luxembourg in the EU were producing less energy from renewables. Over the last three years the amount of power generated by renewables has doubled. Eventually renewables should lead to prices coming down, he says.

Henri Proglio, the EDF chairman, says Germany has offered the renewable energy huge subsidies. So the taxpayer is paying for this, he says.

Q: Can you say more about the role of the Chinese?

Proglio says EDF has been in partnership with the Chinese for 30 years. It is a positive partnership, he says. The Chinese are happy to come on board because of the quality of the project.

But EDF will have global control, he says.

Now it's time for questions.

Q: [To Davey] Should EDF avoid price rises?

Davey says he did speak about this with de Rivaz this morning. But de Rivaz (or "Vincent" as Davey calls him) would not tell him what EDF was going to do about their prices.

He says EDF has to compete with five other big suppliers.

De Rivaz says EDF is "very conscious indeed" of the impact of price rises on customers. 

He will not comment on what his competitors have done. And he will not comment on what EDF will do. Today is is focusing on the future.

Providing more certainty for the future will stop bills going "up and up", he says.

In the long run this project, and others, will bring stability and certainty.

Customers will not start paying for Hinkley Point until 2023, when the first energy from the power station is produced.

Q: What is the construction value to the UK? You says up to 57% of the jobs could go to the UK? What is the bottom estimate?

Davey says getting 57% of the jobs going to the UK was an important part of the negotiation. De Rivaz will explain more.

Q: Experts say the costs are unexplored, and one told the Guardian that Britain would now be at the forefront of discovering the costs of these new ventures. Why is that, given that Osborne said he did not want the UK to be ahead of other countries on green measures?

Davey says there is some certainty about costs. If there is a cost over-run, EDF will pay, he says. 

Vincent de Rivaz, the EDF Energy chief executive, says today is a historic day.

EDF is the largest provider of electricity in the UK, he says.

This deal is "fair and balanced" for EDF, for the UK and for customers.

It will help the UK have affordable low-carbon electricity, at a price affordable to customers.

He says today's announcement will kick-start the renaissance of the nuclear construction industry in the UK.

He thanks government officials for the "fair process" they have observed during the negotiations.

And he thanks George Osborne for making this project viable. And he thanks Lord Deighton, the infrastructure minister, who was also involved in the negotiations.

Being part of EDF is a privilege, he says. It allows its staff to participate in this "adventure".

Henri Proglio, the EDF chairman, is speaking now.

He pays tribute to the government for its work on the deal.

Davey confirms the strike price.

A gain-share agreement has been struck, which means if EDF achieves savings, they will be shared with the taxpayer, he says.

He says he wants to deal with some key issues.

First, public subsidy.

The government will not provide nuclear with a subsidy unless that is available to other energy providers.

That is the case here, he says.

New nuclear is getting "no special favours".

Second, the deal allows EDF to make a "fair" profit, he says.

The strike price is competitive with renewables.

Davey says today's agreement is not legally binding. It is dependent on getting state aid agreement from the EU.

Ed Davey, the energy secretary, is speaking now.

He says for years it was known that the old nuclear power stations would have to be replaced.

But previous governments did not have the courage to face up to this, he says.

When the new power station is up and running, it will provide enough energy for 6m homes. That is 7% of the country's energy needs, he says.

And energy bills will be 11% lower than by 2030 than they would have been if the nuclear plant had not gone ahead.

Stephen Lovegrove, the DECC permanent secretary, is opening the press conference.

He says he led the negotiations with EDF.

A new generation of nuclear power stations will produce safe, affordable energy, he says.

The decision to build two new reactors is the biggest nuclear project the country has seen, he says.

The press conference is starting now.

While we wait, here's what the coalition agreement (pdf) actually says about subsidies for nuclear energy.

Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects (under a new National Planning Statement), and also provided that they receive no public subsidy. 

I suppose this makes this a rare example of a double U-turn: the Lib Dems going back on their opposition to new nuclear power stations and the Tories going back on their insistence that any new power stations should not receive a public subsidy.

We're still waiting for the press conference to start. I'm monitoring it on the live feed. My colleague Fiona Harvey is there in person.

Still waiting for presser to start. Big question - did Ed Davey come from Somerset this morning by enviro very unsound helicopter?

Here's Ed Miliband on the Hinkley Point announcement.

We’ll scrutinise these proposals, but we’re in the ridiculous position today where we’ve got the prime minister who says that he can fix prices 35 years ahead for the energy companies, but he can’t freeze prices now for the consumer, and no wonder we’ve got a cost of living crisis in this country.

And here is some of the most interesting Twitter comment I've seen on the Hinkley Point announcement.

From Matthew Pencharz, Boris Johnson's environment adviser

From Andrew Cooper, a Green councillor

From the New Statesman's George Eaton

From the author Michael Rosen

From the BBC's James Landale

From the journalist Christian Wolmar

From Conservative MP Mark Pritchard

From PoliticsHome's Paul Waugh

From the BBC's Andrew Neil

David Cameron has been visiting Hinkley Point this morning.

It seems the prime minister's spokesman chose his words carefully when discussing Hinkley Point C at the lobby briefing this morning.

Ukip has put out a statement welcoming the fact that the government has taken a decision about Britain's "much-needed nuclear capacity", but criticising the detail of what is proposed.

This is from Nigel Farage, the Ukip leader.

With new technology coming on stream this approach looks like a dangerous gamble. As the small print says, prices can always go down as well as up. The government's decision to commit to £92.50 per megawatt hour may prove to be a great folly, especially if we as a country get serious about fracking and the massive potential of cheap shale gas.

And this is from Roger Helmer, Ukip's energy spokesman.

I am deeply concerned that this new proposal risks privatising the profits into the hands of the foreign EDF Energy, whilst socialising the risks for taxpayers.

I am also wary that this deal could be an accounting trick designed to keep billions of state subsidy off the UK's deficit figures.

It is a huge indictment of all three of the old parties that they chose to squander the UK’s clear lead in nuclear energy, so that we now have to go cap-in-hand to the French and the Chinese for help.

Damian Carrington, the Guardian's head of environment, has delivered his verdict on the Hinkley Point deal. He says the government's decision is a terrible one.

Here's an extract from his blog.

EDF and the government say the deal protects the public against the near-certainty of broken promises on costs. But read the small print: "The strike price could be adjusted, upwards or downwards, in relation to operational and certain other costs." Perhaps the government could bail out of the deal if the costs soared? No: "Hinkley Point C would be protected from being curtailed without appropriate compensation." If new risks came to light increasing the cost of insurance, could we get out then? No: "Protection would be provided for any increases in nuclear insurance costs as a result of withdrawal of government cover." No wonder opponents are terrified by the lack of any independent scrutiny of the deal the government has signed.

The nuclear industry has captured the government as comprehensively as the big six energy companies have captured the domestic energy market. Don't forget that just 48 hours after the Fukushima catastrophe, government officials were working with the industry to play down the terrible events - before they had even unfolded.

The alternative to nuclear, made to appear unthinkable by the industry's lobbying, is in fact far from inconceivable. A huge effort to improve the UK's woeful energy efficiency is the first step. The UK government currently expects electricity demand to rise by 33-66% by 2050. Why? Germany predicts a 25% cut. That's how to seriously cut energy bills and the carbon emissions driving climate change: by not having to generate power in the first place. It also happens to create thousands of jobs in every part of the UK, unlike the government's failing green deal energy efficiency programme, which is actually killing jobs.

Is Ed Davey right to say that Hinkley Point, and the "strike price" guaranteeing EDF nearly twice the market price for energy generated by the new nuclear power plant, is good value for consumers? (See 10.06am.)

My colleague Karl Mathiesen is doing an investigation at the Eco Audit blog. Do help him out if you can.

Labour supports nuclear energy. In an article for LabourList Caroline Flint, the shadow energy secretary, says that, while the party reserves the right to scrutinise the detail of the deal, nuclear power is "an important part of a cleaner, more secure and more affordable energy mix for the future".

More interestingly, she says that the government's decision to fix a long-term deal over the "strike price" with EDF puts the row about Ed Miliband's proposed 20-month energy bill freeze in perspective.

[The deal] shows that all the scaremongering about Labour’s energy price freeze was wrong.

As we argued, what investors need is not short-term gains based on overcharging, but long-term certainty about the returns on their investment – whether that’s a wind farm, a gas-fired power station or, in this case, a nuclear power station.

That is why Labour has supported the Energy Bill which, through a mechanism known as Contracts for Difference, essentially guarantees investors a fixed rate of return on investments in low-carbon energy.

Another energy company has announced that it is putting up its prices. The Press Association has snapped this.

Energy firm npower said today that electricity prices will rise by 9.3% and gas prices by 11.1% from December 1. 

And here's the EDF news release about the announcement.

DECC has also produced these two infographics about HPC (Hinkley Point C).

David Cameron has put out this statement about the Hinkley Point C (HPC) deal.

Earlier this month I spoke about our new industrial policy that looks to the future, and about our determination to embrace new technologies and back new industries and energy sources so that they can flourish and help us build a rebalanced economy across the country.

As part of our plan to help Britain succeed, after months of negotiation, today we have a deal for the first nuclear power station in a generation to be built in Britain.

This deal means £16bn of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole. As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business.

This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer term security of supply.

I've taken the quote from the Department for Energy and Climate Change's news release.

The news release includes details about the agreement with EDF, including the "strike price" and how it could be adjusted.

DECC also has this summary of what it sees as the benefits to Britain.

Building HPC will have significant benefits for the UK economy, including:

• A massive investment by EDF Group and its fellow investors of around £16 billion to build the plant. UK companies could benefit from getting up to 57% of the work;

• 25,000 jobs created during construction, with 5,600 people employed on site at peak of construction, and 900 permanent jobs over 60 years of expected operation;

• Power provided for nearly 6 million homes, an area almost twice the size of London, with the site meeting around 7% of the UK’s electricity demand when running at full capacity; and

• A clean, home-grown source of electricity, which will reduce the UK’s emissions by 9 million tonnes of CO2 per year, helping to meet climate targets.

Often politicians are accused – rightly – of being obsessed with the immediate or the short-term: tonight's headlines, this week's GDP figures, next year's elections.

But from time to time they take decisions that will last for decades, and today's announcement of the go-ahead for a new nuclear power station at Hinkley Point C is just such a moment. It is not something that has been dreamt up overnight. It was Tony Blair's government that first proposed a new generation of British nuclear power stations and the agreement announced today is the product of negotiations lasting two years. But it should result in the construction of a plant that will generate energy into the second half of the 21st century. In other words, it will probably keep going longer than most of the people involved in taking the decision.

Here's the Guardian's story about the announcement. And here's how it starts.

Britain is to embark on building its first nuclear power station for two decades as the coalition hands a multibillion pound subsidy to France's EDF with help from a state-owned Chinese firm.

The two planned pressurised water reactors at Hinkley Point C, Somerset, are the first to start construction in Europe since Japan's Fukushima disaster and the first in the UK since the Sizewell B power station came online in 1995.

The new reactors, which will cost £14bn, are due to start operating in 2023 if built on time and will run for 35 years. They will be capable of producing 7% of the UK's electricity – equivalent to the amount used by 7m homes.

In details released on Monday morning, the strike price – the fixed price at which output will be sold – has been set at £89.50 per megawatt hour for electricity produced at the new power station. That price will be fully indexed to consumer price inflation. But the price, at 2012 prices, is dependent on EDF moving ahead with a second plant, Sizewell C, in Suffolk. If it decides not to proceed, another £3 per MWh will be added to the strike price for Hinkley, bringing it up to £92.50 per Mwh.

And here's the formal announcement from the Department for Energy.

I will be reporting the announcement in more detail, and covering the reaction, throughout the day.

Here's the agenda for the day.

11am: Number 10 lobby briefing.

12.30pm: Ed Davey, the energy secretary, holds a press conference on the Hinkley Point announcement.

2.30pm: Eric Pickles, the communities secretary, takes questions in the Commons.

3.30pm: Davey gives a Commons statement on Hinkley Point.

As usual, I’ll also be covering all the breaking political news as well as looking at the papers and bringing you the best politics from the web. I’ll post a lunchtime summary at about 1pm and another in the afternoon.

If you want to follow me on Twitter, I’m on @AndrewSparrow.