EDF outlines £40 levy on bills

Nuclear firm EDF energy says a £40 levy will need to be added to energy bills in order to make new nuclear build financially viable.

The firm has received provisional approval to build four nuclear power stations in the UK and wants to open the first new reactor by the end of 2017 as part of the government's plan to build 16MW of new nuclear capacity.

But new reactors are likely to cost £5bn and the current low price of carbon in the EU emissions trading system is not enough to make nuclear build competitive with carbon-heavy generation such as coal or gas.

EDF says in an analysis the government must put a floor in the carbon price to create enough certainty that nuclear power can be sold competitively in the future.

It doesn't name what that price should be, but the firm's analysis yesterday assumed a price of between €25-€35 – far higher than today's level of €14.

EDF says a levy of around £40 - 10 per cent of the average electricity bill - would support this floor price financially.

"A carbon price in the region of 25 or 35 euros could potentially result in an increase of about £20 or £40 per household per year respectively at some point in the future," said the firm in a statement.

But consumers are already facing £80 a year on energy bills for environmental measures, plus another £17 annual levy on bills for ten years from 2011 to pay for carbon capture and storage.

EDF points out that the extra cost to consumers would not be necessary if tighter caps in the emissions trading system provided a stronger carbon price.

If this was the case polluters would bear the cost and "nuclear would not get a penny of the money raised by Government from the carbon market," the statement says.

Measures to encourage investment are expected to be brought forward by government next year.