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NAO: EDF nuclear influence 'significant'

French energy giant EDF holds a “potentially significant influence” over the success of the Government’s nuclear new-build programme, the National Audit Office has warned.

The spending watchdog last week told the Government it needed to make progress on contingency plans in case EDF became unwilling to build the new power stations.

EDF owns five of the 11 sites earmarked for potential nuclear new build. The NAO said the energy firm had a “credible programme” to build the reactors, but that construction would depend heavily on a range of factors, some beyond its control.

These include carbon prices, planning consent and EDF’s overall strategic priorities and financial position.

EDF intends to build four nuclear reactors on the land acquired through its purchase of British Energy - two at Hinkley Point in Somerset and two at Sizewell in Suffolk.

It is aiming to build all four by 2025, with the first one operational by 2017.

The NAO report said: “Hinkley Point and Sizewell [are] generally considered, by industry, to be the most attractive sites and most likely to be developed first.

“EDF therefore has a central position in new nuclear in the UK and a potentially significant influence over the realisation of the Government’s aims for the construction of new nuclear power stations.”

NAO head Amyas Morse added: “The Department of Energy and Climate Change now needs to make real progress on its contingency plans should EDF be unwilling to build new nuclear power stations.”

The NAO said the first milestone in the Government’s programme would be for EDF to secure planning permission at Hinkley Point and Sizewell. To meet its timetable, EDF would need to obtain planning consents
in 2011.

EDF has already let more than 40 contracts for preparatory works and said it had a further 150 contracts
in the pipeline for construction work at Hinkley and Sizewell.

Balfour Beatty is understood to have teamed up with Vinci Construction Grands Projets to bid for the Hinkley job, while Kier is working with Bam Nuttall.

Bouygues and Laing O’Rourke have also formed a joint venture, while Costain, Carillion, Skanska and Morgan Est have all also shown interest in the £4 billion project.

EDF is expected to submit a planning application for the site over the summer.

The NAO’s comments were made in a report examining whether the Government met its strategic objectives in the
£12.5bn sale of past of British Energy to EDF last year.

On 5 January 2009, the Government sold its stake in British Energy to a wholly owned subsidiary of EDF.

The Government received £4.4bn for its interest, which was set towards the cost of decommissioning British
energy’s existing nuclear stations.

The Government’s primary aim in the sale was to ensure nuclear operators were able to build and operate new nuclear power stations from the earliest possible date with no public subsidy.

The report said: “To minimise exposure to the risk of being unduly dependent on a single company for the timely progression of new nuclear build, and avoid being in a weak negotiating position on issues such as the
carbon price and the cost of disposing of nuclear waste, the Government secured some legally binding commitments from EDF as a condition of selling its interest.”

EDF agreed to sell British Energy land at Bradwell and either Dungeness or Heysham. It also agreed to sell land it
owned at Wylfa, which was last year purchased by E.On and RWE Npower.

The report said this, at least, created “a credible competitor”. But the report warned it would be several years before the Government could determine whether the sale of British Energy would lead to the construction of
new nuclear power stations with no public subsidy.