EDF Energy chief ready to quit if Hinkley Point deal collapses

Monday, May 6, 2013

The chief executive of EDF Energy will leave Britain if the French company's £14 billion Hinkley Point reactor project collapses.

Vincent de Rivaz, the longest-serving boss of Britain's Big Six energy companies, has staked his credibility on getting the plan to build Britain's first new reactors for decades off the ground.

However, the chances of the project going ahead are receding, with EDF Energy and the Government in a stand-off over the level of subsidies - funded by levies on consumers' bills - that the company will receive.

One source said that the Government had made several minor concessions in recent days, but the two sides remained far apart.

According to well-placed industry sources, Mr de Rivaz would seek a new role within the parent EDF Group, which is majority-owned by the French Government and is based in Paris, if the project were to collapse. The 59-year-old, who is on EDF Group's executive committee, was appointed chief executive of LE Group, the forerunner to EDF Energy, in 2002.

EDF Energy declined to comment, but sources close to the company said that there was no plan to deal with Mr de Rivaz's departure.

Nuclear is central to the strategy of EDF Group, whose reactors generate about three quarters of France's electricity. It wants the Hinkley Point twin reactor project in Somerset to be a showcase for the new French-owned Areva reactor design to help it to win reactor orders overseas.

However, Hinkley Point costs have risen by about 40 per cent to £14 billion, which means that EDF Energy must secure bigger subsidies from the Government to make the plan viable. The company wants a guaranteed fixed price of £100 per megawatt hour (MWh) for about 35 years for the electricity generated by Hinkley Point, almost twice the present wholesale rate, which would give it a 10 per cent rate of return. The Treasury is anxious about saddling consumers with high electricity costs for decades, believing that new gas plants would be a cheaper alternative. It is refusing to sanction a level above £80/MWh.

With EDF Energy spending £1 million a day to keep the project going, it is thought that the group will walk away if no deal is struck by the summer. Last month EDF announced job cuts, believed to amount to about 150 out of the project's 800-strong workforce, but insisted that talks with the Government were making progress.

The project's collapse would also harm government plans to keep the lights on and cut carbon emissions. Ministers had expected that new reactors would generate more than a third of the country's electricity by 2030.

Tim Yeo, chairman of the Energy and Climate Change Select Committee, warned the Government against scrapping its nuclear programme in favour of a "dash for gas ... The danger is that if we do not have nuclear reactors built in 2020, the temptation will be to build more gas plants, which will distort the generation mix. Gas would not get us to where we need to go in terms of carbon emission reductions."

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