EDF Wins Interim Paris Ruling Over Hinkley Point Board Approvalby and
Unions had sought to suspend U.K. nuclear power project
Final ruling on substance of case scheduled for Sept. 22
Electricite de France SA won a ruling avoiding the temporary suspension of its decision to go ahead with an 18-billion pound ($23.7 billion) project to build Britain’s first nuclear power plant in more than 20 years.
Judge Marie-Helene Poinseaux said Friday there is no urgency for an interim ruling pending a final decision on Sept. 22.
France’s state-run utility voted on July 28 to press ahead with signing contracts, just hours before the government of U.K. Prime Minister Theresa May cast doubt on the project, pledging to review the deal in early autumn. This week the U.K. said it couldn’t be held responsible for costs incurred if the plan is scrapped. EDF had already spent 2.5 billion pounds developing the site in southwest England.
If ratified by the U.K., the Hinkley Point contract would result in EDF being paid 92.50 pounds for every megawatt-hour of electricity it produces for 35 years, more than twice the current market price. That would generate an annual rate of return of 9 percent if the plant is built on time and budget, according to Chief Executive Officer Jean-Bernard Levy.
EDF’s main labor unions sought to have the board’s decision overturned as they want the project to be delayed to reduce financial pressure and construction risks. They want it pushed back by about three years to give the company time to complete the construction of similar reactors in France and China, which are over-budget and years behind schedule.
The financial risks for EDF were highlighted in March when former Chief Financial Officer Thomas Piquemal resigned because of concerns the company’s balance sheet was too stretched to handle construction, despite the financial return once Hinkley is operational.
Rating companies have said a decision to proceed might trigger a credit downgrade. EDF plans to sell 10 billion euros of assets by 2020 to help fund the project.
Hinkley Point would take 10 years to build and is expected to satisfy about 7 percent of the U.K.’s power demand, providing enough electricity for about 5 million homes. May’s predecessor David Cameron backed the plan to create jobs and meet commitments to reduce greenhouse gas emissions.