Hinkley Point Nuclear Plant Deal To Go Ahead
Critics warn that a landmark deal to build Britain's first new nuclear plant in a generation could push up household bills.
A consortium led by French firm EDF energy, which includes Chinese investors, will build the Hinkley Point C plant in Somerset.
It should begin operating in 2023 and ministers argue it will help secure future energy supplies, hasten the move to low-carbon power and lower generating costs.
The agreement was unveiled shortly before Npower became the latest of the "Big Six" energy firms to raise its prices.
David Cameron hailed the nuclear project as "brilliant news" for Britain, calling it a "landmark in our economic growth plan".
But the Government has come under fire for guaranteeing to pay £92.50 per megawatt hour of electricity produced - a so-called "strike price" double the current market rate.
Campaigners have called for an independent review to ensure the deal is value for money, and also want a clawback for consumers in case the Government has overpaid.
Adam Scorer, director of Consumer Futures which represents consumers in regulated markets, warned that households could end up paying over the market price "for decades to come".
"A guaranteed price of £92.50 MWh moves the risks of future variations in wholesale prices from investors on to consumers, will likely see household bills increase and will distort future investment in electricity generation," he said.
Richard Lloyd from consumer group Which? said: "If it emerges that the Government has overpaid, we believe there should be a mechanism to refund consumers instead of a windfall to the suppliers."
Greenpeace was also highly critical, warning it would distort energy policy by distracting from cheaper, new clean technologies.
The Hinkley plant will be the first new nuclear power station to be built in Britain since Sizewell B in Suffolk, which started generating electricity in 1995.
Costing £14bn, the project will slash UK carbon emissions by nine million tonnes a year, create 25,000 construction jobs and 900 permanent positions once operations start.
The contract is due to run for 35 years, with the electricity price increasing annually in line with CPI inflation. At full capacity, the two reactors could provide up to 7% of the country's energy needs.
The agreed "strike price" could fall by £3 if another mooted development in Suffolk goes ahead, allowing for efficiencies in development and testing.
Energy Secretary Ed Davey insisted he had secured "good value" following more than a year of intense negotiations.
"What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options," he said.
It is understood China General Nuclear Power Group and China National Nuclear Corporation will be among the group of investors.
Chancellor George Osborne removed one of the last stumbling blocks last week by announcing Chinese firms could invest in civil nuclear projects in the UK.
The funding agreement will almost certainly mean that the new reactor will be a mirror image of the Taishan plant in China.
Anti-nuclear activists near the site claim they have been misled about the project.
Campaigner Theo Simon told Sky News: "We were told it would provide cheap energy; we were told it would help us to bridge the energy gap in the early 2000s.
"Now it seems it won't be built (until) 2025 and we will all be paying for the profits of EDF and Chinese nuclear corporations for the next 40 years."
Energy policy has shot up the agenda since Labour leader Ed Miliband pledged to freeze retail prices for 20 months. The Tories have branded this an unworkable "con".
But Shadow energy secretary Caroline Flint said on Monday: "David Cameron is now in the ridiculous position of saying that they can set prices 35 years ahead for the companies producing nuclear power, while insisting they can't freeze prices for 20 months for consumers while much-needed reforms are put in place," she said.
The Government claims building a new fleet of nuclear power stations could reduce bills by more than £75-a-year by 2030.