CASH-strapped West Somerset Council could be left to foot a £15,000 bill after Hinkley Point B power station was given a £6.5 million business rates refund.

A quirk of the system means that although the rebate will be covered by the Government, the authority has to pay the money back to station owner British Energy then claim it back from Westminster.

But to find the money in the first place the council will have to take out a loan and pay interest on it - and the interest will not be covered by the Government.

The news was greeted furiously by councillors at West Somerset Council's annual meeting on Wednesday, with many urging the authority to withhold money from the Government to cover the expense.

Officers warned councillors they would be breaking the law by refusing to hand over money collected on behalf of Government.

But they did advise members to hang on to British Energy's rebate until they received the equivalent of a "final demand".

Cabinet member Cllr Doug Ross said everything about the non domestic rates system infuriated him and the potential cost of interest on the loan could effectively wipe out a one per cent rise in Council Tax.

Cllr Jon Freeman said he was angry British Energy had been given the rebate at all and claimed they were being rewarded for generating less electricity.

Cllr Hugh Davies said the council should hang on for at least six months before paying the rebate and nothing should be paid until the Government handed over the money.

Retired optician Ian Melhuish added: "If I sold less spectacles I didn't pay less rates, so why should they pay less just because a reactor isn't working and they're not producing as much electricity?

"The Government should pay Hinkley Point back."

Executive director Adrian Dyer said officers would withhold the refund for as long as possible to mitigate the impact of any loan charges but reminded members all they were being asked to do was approve an increase in the authority's authorised borrowing limit from £15m to £22 m.

Finance chief Jacky Barnes confirmed Hinkley's rateable value was determined by its generating capacity and a cut in output dating back to September 2006 had now been taken into account by the Government and the rateable value revised accordingly.

"This council is obligated to process this refund 'within a reasonable time period'," she said. "However, it may well take up to three months for central Government to reimburse this council and for the future non domestic rate pool to be adjusted.

"This council does not have the funds available to process a refund of this value in advance of central Government reimbursement and it will, therefore, have to resort to temporary additional borrowing in order to process the payment.

"Ultimately, the cost to this council will be the interest charges on the £6.5 million during the period the council is awaiting reimbursement.

"At current rates of interest this is estimated to be in the order of £169 per day - £15,437 for the three month period that it is likely to take to obtain reimbursement."