Nuclear Power
Investment in Britain's nuclear power plants at Hinkley in Somerset could be under threat from a probe from the European Commission (Reuters)

A deal between the UK government and French energy giant EDF to build two nuclear plants at Hinkley Point in Somerset - potentially creating about 25,000 British jobs - could be stymied by the European Commission.

Joaquin Almunia, the EC's competition commissioner, is considering a formal investigation into whether the deal violates the European Union's (EU) rules on state aid, he said at a press conference in Brussels.

EDF caused controversy with the revelation that an electricity price of £92.50 ($149.60, €109.34) per megawatt per hour will be fully indexed to inflation through the Consumer Price Index.

The contract, which will price electricity at £89.50 per megawatt per hour if a second nuclear plant at Sizewell goes ahead, will last for 35 years from the date of commissioning.

"We are starting to analyse what is in the British proposal. Probably we will open a formal investigation because many people are asking the same question as you do," Almunia said when asked whether the British proposal for 35 years of a guaranteed price was too long under the terms of EU rules.

The deal, which is worth £16bn ($26.2bn, €19.3bn) deal will see the first new nuclear reactors built in Britain for a generation if the enterprise goes ahead.

The project will be financed by a group of companies, including the China General Nuclear Corporation (30-40%), EDF (45-50%) and Areva (10%).

The pricing related to the project was also criticised by members of the Labour party.

Labour's shadow energy and climate change secretary, Caroline Flint attacked it on the grounds that it was hypocritical.

She said that it was wrong for the coalition government to state that a constant price of energy could be guaranteed for 35 years, when it would not freeze energy prices for hard pressed consumers in the immediate future.

China Climate Change