Centrica alert over a nuclear snub

By LISA BUCKINGHAM AND TOM MCGHIE
Updated: 17:13 EST, 18 September 2010

British Gas owner Centrica will be forced to spend billions of pounds on new gas-fired power stations to keep the lights on if it does not secure consent for the Hinkley nuclear reactor by early 2012.

Delays in the planning system could also spark a dash for gas among other energy providers.

Centrica chief executive Sam Laidlaw warned that would jeopardise the security of energy supply as Britain would need to import about 75 per cent of its gas needs.

Alert: A new nuclear tax will take an estimated £2 billion a year out of the business

In addition, the country would almost certainly face penalties for failing to meet internationally agreed emission targets.

Laidlaw said speedy planning consent was vital if Centrica and EDF, its nuclear building partner, were not to risk being 'sent to the back of the queue' for crucial nuclear construction contracts.

An aide to Laidlaw pointed out that more than two gas-fired stations, each costing hundreds of millions of pounds, would be needed to produce the same amount of power as a nuclear station on the scale of Hinkley. EDF and Centrica plan four nuclear plants.

Laidlaw said there was also a need for the Government and industry swiftly to reach an agreement on a new minimum carbon price and to redesign the pricing of the electricity market to take account of alternative energy sources such as wind power. Consumers face an average £260-a-year rise in fuel bills.

In a further potential setback to Britain's nuclear-building programme, energy giant Eon is reconsidering all investment in the UK after the imposition of new financial burdens in its domestic German market.

A new nuclear tax will take an estimated £2 billion a year out of the business, making it more difficult to raise money and potentially threatening its ability to build nuclear stations in Britain.