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EDF Doesn’t Have U.K. ‘Over a Barrel’ on Nuclear, Minister Says

June 6 (Bloomberg) -- Electricite de France SA doesn’t have Britain “over a barrel” in a deal to build the country’s first new nuclear plant in almost two decades, a minister said.

“We would like to do the deal with EDF but we are not going to do it at any price,” Energy Minister Michael Fallon said in an interview in “The House” magazine, which is distributed to lawmakers. “It’s a very complex negotiation and we are inching closer but we are not quite there yet.”

The U.K. government is involved in protracted negotiations over a deal that would guarantee how much the French utility earns for power from two reactors planned at Hinkley Point C in southern England. Both sides have said they’re prepared to let talks fail if they can’t agree a price. EDF in April reduced staff at the site in Somerset to curb costs.

“We are not over a barrel,” Fallon said. “We have Hitachi Ltd. ready to come in, they are next in line. So we are not wholly dependent on Hinkley.”

The Japanese manufacturer is planning to build as many as six new nuclear reactors at two sites through the Horizon Nuclear Power venture it agreed to buy in October. Britain is seeking to spur new reactors as part of a 110 billion-pound ($172 billion) investment plan to replace aging power plants and upgrade grids.

There are still “five or six issues” dividing EDF and the government apart from the level the so-called strike price is set at, Fallon said in the interview. EDF said in a statement yesterday it had reached labor-relations agreements with trade unions and a major contractor for Hinkley Point C, and that both sides saw the power-price contract talks as ”positive”.

On U.K. shale-gas, Fallon said financial incentives to start hydraulic fracturing will take effect in April after being “firmed up” in the summer. Fallon said the British Geological Survey report on shale gas estimates in the Bowland shales from Lancashire across to Yorkshire will be published in a few weeks.

He said the government will run an auction for power generators to provide electricity at times of peak demand in the second half of next year once the so-called capacity market plan gets European approval, with plants ready to deliver in 2018. The government will publish draft strike prices guaranteeing the payments renewable power generators will receive in July, he said.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

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

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