A multi-billion pound energy project that is expected to create thousands of jobs in the South West has been described as "risky and expensive" by the National Audit Office.

In a report, it said the Department for Business, Energy and Industrial Strategy's deal for Hinkley Point C power station in Somerset had locked consumers into a deal with "uncertain strategic and economic benefits".

It has been estimated that Hinkley, which is being developed by EDF Energy and the China General Nuclear Power Corporation, will generate 40,000 jobs and provide work for contractors in the South West.

But the National Audit Office (NAO) said the Department for Business, Energy and Industrial Strategy had not sufficiently considered the costs and risks of its deal for consumers.

A minimum price of £92.50 per megawatt hour generated by the plant - twice the wholesale price - for 35 years was agreed by the Government with EDF.

Through subsidies on customers' energy bills, the Government will pay the difference between the wholesale electricity price and the minimum it has promised.

Delays have pushed back the nuclear power plant's construction, and the expected cost of these top-up payments has increased from £6billion to £30billion.

Amyas Morse, the head of the NAO, said: "The department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace.

"Time will tell whether the deal represents value for money, but we cannot say the department has maximised the chances that it will be."

The NAO said the Government's case for the project had weakened since it agreed key commercial terms on the deal in 2013.

It said the department had only considered the impact on bills up to 2030, which does not take account of the fact that consumers are locked into paying for Hinkley Point C long afterwards.

The report added: "The reactor design for HPC is unproven and other projects that incorporate it are experiencing difficulties.

"Furthermore, EDF's financial position has weakened since 2013.

"The department plans to develop and maintain alternative ways of ensuring energy security to mitigate the risk of needing to provide additional support for Hinkley Point C.

"It will not be known for decades whether Hinkley Point C will be value for money.

"This will depend on whether the current contractual arrangements endure, along with external factors - in particular, future fossil fuel prices, the costs of alternative low-carbon generation, and developments in energy technology and the wider electricity system.

"The Department has, however, negotiated a deal that means some terms can be adjusted in consumers' favour in future.

"It must now ensure it has the right oversight arrangements in place to manage the contract in a way that maximises Hinkley Point C's value for consumers and taxpayers."

What do you think? Email mark@moosemarketingandpr.co.uk 

Readers' views:

Kevin Cranston: This is hardly news. It is a shame that the decision makers could not see the blindingly obvious before they signed us up to this white elephant.