EDF Nuclear Deal in U.K. May Take ‘A Few Months’

The U.K. may take “a few months” to agree the price that Electricite de France SA (EDF) will get for power from Britain’s first new nuclear power station in two decades, Energy Secretary Ed Davey suggested.

The government has been in talks for months with EDF to agree a so-called strike price the French utility will get for power from a planned plant at Hinkley Point in southwest England. Davey told Parliament’s multi-party Energy and Climate Change Committee he won’t sign a contract with EDF unless it represents “value for money” for consumers.

“Even if we agree in the next few months, a nuclear reactor at Hinkley point won’t be producing until the end of this decade at best,” Davey said today. “They have been very constructive negotiations. They are taking some time, and that’s because they are very complicated.”

The comments signal that the decision that ministers had hoped to make by the middle of this year may not be made before Parliament rises for its summer recess on July 18. Failure to reach a deal with EDF would delay construction of new reactors in Britain, where all except for one existing atomic plants are due to close by 2023.

Power shortages are possible this decade without a better strategy, the energy regulator Ofgem warned last week. The committee in March said Britain may miss its carbon targets without a ‘Plan B’ to replace nuclear power.

EDF Chief Executive Officer Henri Proglio said in April that he isn’t “in a hurry” to get a deal and that the utility is prepared to allow the talks to fail.

Davey said the talks have spurred “interest from so many nuclear vendors,” and that competition may spur EDF to seek to finalize a deal. He cited the example of Japanese utility Hitachi Ltd. (6501), which in October agreed to buy Horizon Nuclear Power, another U.K. nuclear project, from Germany’s two largest utilities for 696 million pounds ($1.1 billion).

“EDF will, I’m sure, have noticed that Hitachi have bought the Horizon project and Hitachi are powering ahead,” Davey said. “We’ve had a lot of discussions with Hitachi and they will bring an awful lot to British nuclear efforts.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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