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U.K. Will Scrutinize EDF Profit From Carbon Tax, Lawmaker Says

The U.K. will scrutinize Electricite de France SA’s profit from its nuclear power plants under a new carbon tax, according to the chairman of parliament’s energy and climate change committee.

“There is constant suspicion on the part of consumers that the electricity companies simply exploit their position,” Tim Yeo, a Conservative member of parliament, said yesterday in a telephone interview. “I think there’ll be very close scrutiny of what happens here and we want to make sure that consumers are treated fairly.”

Chancellor George Osborne fixed a carbon tax of 4.94 pounds ($8.02) a metric ton from 2013 to raise revenue and prompt investment into power generation such as wind farms and nuclear. Wind farms are subsidized and the coalition government has said no subsidy will be given to new nuclear power stations. The government indicated the tax, part of the Conservative-Liberal Democrat coalition agreement when they took office in May 2010, may rise to 7.28 pounds in 2014 and 9.86 pounds in 2015.

Nuclear generation, which emits almost no carbon, may benefit from higher electricity rates after the tax on fossil- fueled power generation is introduced in 2013, Citigroup Inc. said last month. EDF, owner of eight of the 10 nuclear power stations in Britain, may earn as much as 154 million pounds ($250 million), the bank said. Kaa Holmes, an EDF spokesman in London, wasn’t immediately available to comment.

‘High Carbon Price’

“Having a decent high carbon price is essential to drive more investment in lower carbon alternative technologies but frankly what’s been announced so far is not going to transform the situation,” said Yeo, 66, who is also chairman of London- based Eco City Vehicles Plc, a distributor of cleaner vehicles and AFC Energy Plc, a maker of fuel cells.

The European Union’s carbon cap-and-trade program already requires Britain’s power stations to buy permits to cover a portion of emissions and they’ll have to purchase all allowances from 2013. EU permits for December fell 0.9 percent to 17.16 euros a metric ton as of 1:30 p.m. in London. They have gained 21 percent this year.

“I certainly hope that the EU will consider” a carbon floor in its own market to help drive emissions reductions, he said. The measure could offer “an alternative” to tightening emissions limits, which is less popular in nations still heavily dependent on coal for power generation, he said.

To contact the reporter on this story: Catherine Airlie in London at cairlie@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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