“Spending watchdog condemns ‘risky and expensive’ Hinkley Point”

Owl says: abd still our Local Enterprise Partnership sleepwalks into disaster with OUR money.

“Generations of British consumers have been locked into a “risky and expensive” project by the UK’s subsidy deal for a new nuclear power station at Hinkley Point in Somerset, according to a damning report by the spending watchdog.

The National Audit Office said the contract sealed by ministers last September with EDF to construct the country’s first new atomic reactors in two decades would provide “uncertain strategic and economic benefits”.

Further, Brexit and Theresa May’s decision to quit an EU nuclear treaty could make the situation even worse, by triggering taxpayer compensation for EDF or a more generous deal for the French state-controlled company.

The watchdog condemned the past two governments for failing to look at alternative ways of financing the power station, such as taking a stake in the construction.

Observers labelled the report “deeply worrying”, a “strong reprimand” and a vindication of Hinkley Point C’s critics, who had argued it was too costly and advocated alternatives such as wind and solar power.

Under the terms of the 35-year contract, EDF is guaranteed a price of £92.50 per megawatt hour it generates, twice the wholesale price.

The subsidy is paid through energy bills, which the government estimates will translate to a £10 to £15 chunk of the average household bill by 2030.

At the heart of the spending watchdog’s criticism is the coalition government’s failure to look at any alternative financing model, such as taking an upfront stake in the £18bn project.

Instead, the Lib Dems and Tories decided all the construction risk for the plant must lay with EDF and its partner, Chinese state-owned CGN, to keep the project off the government’s books.

Taking a stake would have posed its own risks because of delays to projects with the same reactor design in Finland and France, the NAO admitted. “But our analysis suggests alternative approaches could have reduced the total project cost,” it added.

If the government had taken a 50% equity stake in the construction it could have almost halved the guarantee power price to as low as £48.50 per megawatt hour, according to the NAO.

The auditors were critical of ministers’ decision to negotiate bilaterally with EDF, rather than waiting for other new-build nuclear consortia to compete – an approach that the NAO noted had brought prices down on similar subsidy deals for windfarms.

The government’s case for the contract also weakened after the commercial terms of the deal were agreed by the then prime minister, David Cameron, in 2013, the watchdog said.

Delays to Hinkley and falling wholesale prices, caused by a two-year oil price slump, meant the total costs to consumers for the 35-year deal ballooned from £6bn in 2013 to £30bn now.

That number may rise even higher after new figures on power price expectations are released by the Department for Business, Energy and Industrial Strategy (BEIS) next month.

Brexit could make matters worse still, the spending watchdog warned. In January, the government said it would quit a nuclear cooperation treaty as part of the process of leaving the EU.

That withdrawal from Euratom, the NAO said, “might be interpreted as a change of law” resulting in an adjustment of the £92.50 price promised to EDF, or even trigger a one-off payment for EDF through a compensation clause in the contract.

While the NAO concluded “it will not be known for decades whether Hinkley Point C will be value for money”, the usually conservative watchdog was strongly critical of the government for not assessing alternative finance models.

However, it said the report should not be taken as a recommendation that the government takes a stake in future nuclear projects – but the idea should be explored. Such an approach has been discussed by the Japanese and UK governments for a Japanese-backed plant in Wales.

Unions, industry experts and green groups said the report showed lessons must be learned for any future nuclear subsidy deals.

Commentators also raised questions over whether Hinkley would look cheap compared with alternatives such as wind and solar, which the government had argued would cost more.

Mike Clancy, general secretary of the Prospect union, which represents nuclear workers, said: “This is a deeply worrying report that highlights the lack of accountability and leadership in British nuclear policy.”

Dr Robert Gross of Imperial College called the report a “strong reprimand” of the past two governments.

A “slavish devotion” to free markets that ruled out taking a stake and failure to wait for other nuclear projects to bring competition were to blame, he said. “Renewables will become cheap, and this was not anticipated at all. It now looks likely that by the time it is built Hinkley will seem expensive compared to new solar and wind projects.”

Nina Schrank, energy campaigner at Greenpeace UK, called the report a damning indictment of the government’s agreement. “This year’s school leavers will still be paying for Hinkley when they approach their pension age, so it is concerning that the National Audit Office is suggesting it may not be worth their money,” she said.

Jim Skea, president of the Energy Institute, which represents energy professionals, said the report held “clear messages on the steps needed to protect consumers and taxpayers in the future, including possibly radical changes to nuclear policy”.

An EDF spokesman said: “Today’s report shows that Hinkley Point C remains good value for consumers compared with alternative choices. Consumers won’t pay a penny until the power station is operating and it is EDF Energy and CGN who will take the risk and responsibility of delivering it.”

A BEIS spokesman said: “Hinkley Point C will be the first new nuclear plant in a generation. This was an important strategic decision to ensure that nuclear is part of a diverse energy mix.

“Consumers won’t pay a penny until Hinkley is built; it will provide clean, reliable electricity powering homes and creating more than 26,000 jobs and apprenticeships in the process.”

https://www.theguardian.com/uk-news/2017/jun/23/spending-watchdog-condemns-risky-expensive-hinkley-point-c-nuclear

“Sizewell B and 27 other EDF nuclear plants ‘at risk of catastrophic failure”

“A new report finds that 28 nuclear reactors, 18 of them EDF plants in France and one at Sizewell in the UK, are at risk of failure ‘including core meltdown’ due to flaws in safety-critical components in reactor vessels and steam generators, writes Oliver Tickell. The news comes as EDF credit is downgraded due to a growing cash flow crisis and its decision to press on with Hinkley C.

A new review of the safety of France’s nuclear power stations has found that at least 18 of EDF’s units are are “operating at risk of major accident due to carbon anomalies.”

The review was carried out at the request of Greenpeace France following the discovery of serious metallurgical flaws by French regulators in a reactor vessel at Flamanville, where an EPR plant is under construction.

The problem is that parts of the vessel and its cap contain high levels of carbon, making the metal brittle and potentially subject to catastrophic failure. These key components were provided by French nuclear engineering firm Areva, and forged at its Le Creusot.

“The nature of the flaw in the steel, an excess of carbon, reduces steel toughness and renders the components vulnerable to fast fracture and catastrophic failure putting the NPP at risk of a major radioactive release to the environment”, says nuclear safety expert John Large, whose consultancy Large Associates (LA) carried out the Review.

His report examines how the defects in the Flamanville EPR reactor pressure vessel came about during the manufacturing process, and escaped detection for years after forging. It then goes on to investigate what other safety-critical nuclear components might be suffering from the same defects.

Steam generators at 28 EDF nuclear sites at risk

After several months of investigation LA found that critical components of a further 28 nuclear plants were forged by Le Creusot using the same process. These are found in the steam generators – large, pod-like boilers – that have been installed at operational EDF nuclear power stations across France.

The conclusion is based on documents provided by IRSN (the independent French Institut de Radioprotection et de Sûreté Nucléaire) that reject assurances given by both EDF and Areva that there is no safety risk from steam generators containing the excess carbon flaw.

In August 2016, IRSN warned the French nuclear safety regulator Autorité de Sûreté Nucléaire (ASN) that:

EdF’s submission was incomplete;

there is a risk of abrupt rupture which could lead to a reactor core fuel melt; and

immediate “compensatory” measures need to be put in place to safeguard the operational NPPs involved.

… EDF stated yesterday that it will carry out further tests on 12 nuclear reactors during their planned outages in the coming months – and that extended periods of outage are to be expected. “There are outages that could take longer than planned”, an EDF spokesman told Reuters.

“In 2015, we discovered the phenomenon of carbon segregation in the Flammanville EPR reactor. We decided to verify other equipments in the French nuclear park to make sure that other components are not impacted by the phenomenon.”

In anticipation of the nuclear closures, year-ahead electricity prices rose in the French wholesale power market, forcing power rises across Europe up to a one-year high.

Meanwhile Moody’s has downgraded EDF credit ratings across a spectrum of credit instruments. EDF’s long-term issuer and senior unsecured ratings fell from A2 to A3 while perpetual junior subordinated debt ratings fell to Baa3 from Baa2. Moody’s also downgraded the group’s short-term ratings to Prime-2 from Prime-1.

The Review also shows that the reactor pressure vessel of the Flamanville EPR, which is already installed, does not have a Certificate of Conformity issued by ASN. This means that it does not comply with the European Directive on Pressure Equipment, nor does it meet the mandatory requirement of the ASN, which since 2008, stipulates that any new nuclear reactor coolant circuit component has to have a Certificate of Conformity before its production commences.

“Without a Certificate of Conformity the reactor pressure vessel and steam generators currently installed in Flamanville 3 will almost certainly have to be scrapped”, said Roger Spautz, responsible for nuclear campaign at Greenpeace France.

The review, he added, “reveals evidence that at the Creusot Forge plant, Areva did not have the technical qualifications required to meet exacting nuclear safety standards. The plant was not under effective control and therefore had not mastered the necessary procedures for maintaining the exacting standards for quality control in the manufacture of safety-critical nuclear components.”

Areva has now acknowledged that ineffective quality controls at le Creusot Forge were mainly responsible not only for the flaws in the Flamanvile 3 EPR, but across other operational nuclear power plans – and that the technical failures date back to 1965.

Moreover, ASN has indicated that in the nuclear components supply chain three examples of Counterfeit, Fraudulent and Substandard Items (CFSI) have occurred in the year ending 2015.

The recent ASN publication (24th September 2016) of a list of the NPPs affected by the AREVA anomalies and irregularities demonstrates that the phenomenon not only has reached alarming proportions but is continuing to grow under scrutiny.

The number of components affected by irregularities and installed in NPPs in operation increased by 50 in April 2016 from 33 to 83 by 24th September this year. Irregularities affecting the Flamanville EPR increased from two to 20 over the same period.

… As for For Hinkley Point C, it now appears inevitable that the Flamanville reactor will not be completeted by its target date of the end of 2020, indeed it may very well never be completed at all. Under the terms of agreement for the plant’s construction accepted by the European Commission, this would render the UK government unable to extend promised credit guarantees to HPC’s financial backers.

“Now that ASN has deprioritized efforts on the under-construction Flamanville 3 NPP because of its pressing urgency to evaluate the risk situation for the operating NPPs”, says Large, “there is a greater likelihood that Flamanville 3 will not reach the deadline for operation and validation of its technology by the UK Credit Guarantee cut-off date of December 2020.”

Also at risk are the two EPRs that Areva and EDF are currently constructing at Taishan in China. These are now at the most advanced stage of any EPR projects in the world, however there are increasing fears that they contain faulty components.

The vessels and domes at Taishan were also supplied by Areva, and manufactured by the same process as that utilised by Le Creusot. It is suspected that Chinese nuclear regulators may have decided to overlook this problem and hope for the best. However if they discover that the steam generators, which along with the reactor vessels have already been installed, are also at risk of catastrophic failure, that might prove a risk too far – even for China.

The danger for EDF and Areva is that the massive commercial liabilities they may be accruing for faulty reactors supplied to third parties, together with the tens of billions of euros of capital write-downs for projects they have to abandon, and the loss of generation revenues due to plant outages, could easily exceed their entire market capitalisation.

In other words: for EDF, Areva, their shareholders and the entire French nuclear industry, the end really could be nigh.

http://www.theecologist.org/News/news_analysis/2988175/sizewell_b_and_27_other_edf_nuclear_plants_at_risk_of_catastrophic_failure.html

Should we judge our LEP by results?

Our LEP loves to take credit – often for the most tenuous reasons – but will it take criticism?

“The South West has haemorrhaged more than 50,000 manufacturing jobs in the past decade, a new study by GMB has shown.

The figures were discussed at GMB’s annual Congress in Plymouth between June 4 and 6. …

In 2006 the South West supported 294,400 permanent and temporary manufacturing jobs – almost 12% of the all jobs in the region.

By 2016, that had slumped to just 243,100 or 9% of the total.

http://www.devonlive.com/staggering-50-000-manufacturing-jobs-lost-in-a-decade/story-30391778-detail/story.html

No money trees in Devon – or are there?

“Workers in the South West are £1,500 a year worse off in real terms than they were before the financial crash, according to new figures published by the TUC.

The analysis shows that real wages in the region are 6.7 per cent lower, on average, than they were in 2008. …

One in three jobs created in the South West since 2011 have been in insecure work, according to the figures. The TUC estimates that 281,223 people now work in insecure jobs in the region. That represents one in 10 workers in the South West.

TUC General Secretary Frances O’Grady said: “Workers in the South West are £1,500 a year worse off than before the crash.

“This region badly needs a pay rise. It’s nearly ten years since the financial crisis, and working people are still suffering. Politicians have to explain to voters how they’ll create decent jobs that people can actually live on.

“And there needs to be recognition of the damage pay restrictions in the public sector are having. Hard-working nurses shouldn’t have to use food banks to get by.”

http://www.devonlive.com/figures-reveal-devon-workers-are-1-500-a-year-worse-off-than-in-2008/story-30369615-detail/story.html

AND YET:

“The head of a publicly funded body tasked with boosting prosperity in Devon and Somerset has been awarded a 26 per cent pay rise.

Chris Garcia will now earn £115,000 a year for his role as chief executive of the Heart of the South West Local Enterprise Partnership.

The controversial proposal was approved by the LEP board at a meeting in Tiverton on Tuesday, January 17.

Devon County Council had signalled that its representative on the board, Councillor Andrew Leadbetter, would vote against the proposed pay award in light of “the tight financial times in which we live”.

http://www.devonlive.com/figures-reveal-devon-workers-are-1-500-a-year-worse-off-than-in-2008/story-30369615-detail/story.html

Undemocratic mayors, undemocratic scrutiny

“The mere election of a mayor … does not mean these new mayoralties are automatically democratic. Mayors work within combined authorities, with cabinets made up of council leaders – all of whom are indirectly elected through a broken First Past the Post voting system.

But there is no directly elected assembly to hold them to account, like that of the London mayoralty. Instead, the Mayor is scrutinised by Overview and Scrutiny Committees made of councillors and within the council chambers themselves. This means who sits on those committees really matters.

At the Electoral Reform Society, we want to see a better democracy. And the metro mayors are the biggest change to the governance of England in decades. They are an exciting opportunity to change the way our cities are governed to be more inclusive, more local and more visible.

But we are concerned that this structure passes up existing legacies of problems in local government to the new mayoralties, as we point out in our new report From City Hall to Citizens’ Hall: Democracy, Diversity and English Devolution.

Due to our electoral system, Britain has a multitude of local ‘one-party states’, with almost no opposition in the council chamber. Many of these abound in the areas electing metro-mayors, with some councils having just one member from outside the controlling party.

Previous work for the ERS has shown that these councils risk an extra £2.6bn on public procurement each year, due to a lack of scrutiny.

Concerns around scrutiny are particularly strong in some of the metro-mayor areas because the council leaders – who will make up the cabinets – lack any diversity whatsoever. Only two of the council leaders of the six areas electing combined authorities are women. Only one is from a BAME community. This carries with it risks within the policymaking process, narrowing the experience and knowledge-base around the cabinet table.

So far the combined authority scrutiny committees have also demonstrated a lack of diversity, both political and demographic. On the West Midlands Overview and Scrutiny Committee, for instance, ten of twelve political members are drawn from one party, and ten are men.”

http://www.democraticaudit.com/2017/05/03/whos-going-to-hold-the-new-metro-mayors-to-account/

Owl says: Should Devon and Somerset EVER become a combined authority, our councillors and the Mayor will bend their knees to the nuclear and property vested interests of the majority of businessmen (men) who run our Local Enterprise Partnership – forget scrutiny. It didn’t help when the self-same people gave their CEO a 24% payrise and there was NOTHING councils could do about it.

English devolution – undemocratic and unrepresentative

“… The ERS (Electoral Reform Society) has been vocal in pointing out the solely economic focus of devolution – and the corresponding lack of attention to the democracy of devolution. With the public largely shut out of the process, and models imposed rather than chosen, so far citizen involvement in the constitutional future of their own areas has been minimal. …

… The creation of combined authorities highlights a continuing shift in the role of the councillor. Where once councillors took decisions directly on committees they are increasingly scrutineers: holding to account formal executive structures in the form of mayoral or cabinet/leader structures, or scrutinising bodies such as Clinical Commissioning Groups, Local Enterprise Partnerships, Police and Crime Commissioners, and now combined authorities.

The traditional argument for First Past the Post: that it elects ‘strong’ governments, cannot hold up to the reality of modern councillor life in which councillors are as often scrutinisers as decision-makers, not only of their own executives but of bodies external to the traditional council governance structure.

Yet, there are still many councils overwhelmingly dominated by a single party. …”

http://www.electoral-reform.org.uk/sites/default/files/files/publication/From-City-Hall-to-Citizens-Hall.pdf

Devon County Council witholds payment to LEP over CEO 24% salary increase

Owl says: treat the LEP’s comments about the size of its investment with tons of salt, ask for a REAL breakdown of the figure, particularly all expenses related to Hinkley C nuclear power station in Somerset.

Politicians from across the political spectrum have joined forces to condemn a publicly-funded local enterprise partnership for giving its chief executive a £24,000 pay rise.

Devon County Council has withheld £10,000 of the funding it gives to the Heart of the South West LEP after Chris Garcia, its boss, took a 26% pay rise. Eight Devon district councils have each held back £1,000 in protest.

The LEP was one of six set up in the South West in 2011 to replace the regional development agency (RDA), which was abolished by the incoming coalition government.

Its chief executive’s pay leapt from £90,729 to £115,000 in January, voted through by business representatives on the board in the face of fierce opposition from local authority members.

John Hart, leader of Devon County Council, told a meeting of the full council that Plymouth was the only council on the board which supported the increase. He said the LEP should be called in for scrutiny after Thursday’s local elections “to ask them to justify their existence”.

Alan Connett, Devon Lib Dem leader, asked councillors to pull out of the partnership “until common sense prevails with regard to top management pay increases”.

He told last week’s meeting: “To award a £24,000 pay rise was obscene in the circumstances, at a time when teachers, nurses, doctors and the public sector generally had been under restraint of low or no pay rises for years.”

Coun Hart said the council should take no further action because it had gone past the point where anything could be achieved. He said the RDA was a body that was strong and represented the whole region, and it had some clout behind it. “The six LEPs are six mini-RDAs,” he said.

Coun Hart said the Government put up £189 million to be shared among the six LEPs. “The initial allocation for Devon and Somerset was abysmal. It did improve, but at the same time it’s not much in relation to what was being asked for,” he said. “Now, unfortunately, a decision has been taken by the LEP which is beyond our control, but I think it’s right that we show that we are not happy with what’s going on.”

Coun Hart said some of the money allocated in the second tranche of funding still had not been spent, while the third tranche was on the way.

Exeter Labour county councillor Rob Hannaford said: “The time for this body to be abolished has clearly come.”

A LEP spokeswoman said: “We look forward to working with the confirmed leaders of the local authorities following the elections and working with them on how we can together increase productivity and prosperity for all in Devon, Somerset, Plymouth and Torbay.”

She said the LEP had brought in £722.70 million investment and that the LEP was spending tranche two.”

http://www.devonlive.com/politicians-protest-as-devon-enterprise-boss-takes-24-000-pay-rise/story-30305397-detail/story.html