May 3 (Bloomberg) -- The U.K. and Electricite de France SA are making progress on a deal that would guarantee a power price for new nuclear reactors, said a local government official who reported no indication the talks are failing.
David Hall, deputy leader for Somerset County Council, attends strategy meetings with officials from French utility EDF and the U.K. Department of Energy and Climate Change discussing EDF’s proposal for two new reactors at Hinkley Point in Southern England and said the talks seem to be on track.
“The main message we’re receiving from all sides is, ‘Don’t panic’,” Hall said. “This is a very complex and important negotiation because it potentially fixes electricity prices a long way into the future. That’s going to be a challenging negotiation.”
Discussions between EDF and the government over the price for power it earns for the first new nuclear plants in almost two decades have appeared to falter as EDF last month cut staff at the site and EDF Chief Executive Officer Henri Proglio said the company may allow the a deal to fail because of a dispute over the price of electricity.
Hall said he has had no indication the sides are preparing for the talks to fall apart. “They have to make some economies while this drags on but at the same time the overriding message is the same, all sides are working on the solution,” he said.
EDF is seeking a strike price of at least 95 pounds ($148) a megawatt-hour for power from Hinkley, and is trying to lock in the rate for 40 years. The government says it’s trying to make sure consumers get the best value for money from any deal.
Hall, who said he has not been part of the commercial negotiations, expects a deal to be reached in “weeks rather than months.” EDF referred to a statement on April 23 where it said negotiations with the government are making progress, when contacted today.
EDF intends to build two reactors made by Areva SA at Hinkley Point, about 150 miles (240 km) west of London on the southern edge of the Bristol Channel. The units would have a total capacity of 3,260 megawatts, enough to supply 5 million homes for 60 years.
Hall, whose job as a Conservative councilor for Bridgwater East and Bawdrip includes new nuclear development, said the project is “shovel ready” and may create as many as 25,000 jobs in the region. “It’s a huge employment opportunity and an opportunity to boost the economy,” he said.
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