The government sold its 36% interest in the company to EDF for GBP4.4bn last year. Movement in energy prices after completion of the sale show that EDF put forward its offer when energy prices were at a peak. The government’s primary objective for the sale was to ensure nuclear operators are able to build and operate new nuclear stations from the earliest date with no public subsidy.
Factors such as economic conditions, including price of carbon, EDF’s financial position, and planning restrictions could hamper EDF’s efforts to build new nuclear power projects.
NAO said that the government’s primary objective for the sale was to ensure nuclear operators are able to build and operate new nuclear stations from the earliest date with no public subsidy. The Department of Energy and Climate Change did not seek, and EDF did not offer, any binding commitment to build new nuclear power stations as a condition of the sale.
However, EDF’s acquisition of British Energy has improved the prospect of investment in new nuclear power stations, the auditor said.
While the government no longer has a direct financial interest in British Energy, it remains responsible for funding any shortfall in the future cost of decommissioning British Energy’s existing nuclear power stations. The shareholder executive did not carry out a formal assessment of the impact of the sale on the risks that taxpayers might have to bear if the new owner operated British Energy’s power stations in a way that required earlier decommissioning, NAO said.
Amyas Morse, head of NAO, said: “The government sold its stake in British Energy when energy prices were at a peak, and got a good price. The biggest priority for the government was, however, to ensure new nuclear power stations could be built from the earliest possible date and with no public subsidy.
“Whether it will achieve this remains to be seen. The Department of Energy and Climate Change now needs to make real progress on its contingency plans should EDF be unwilling to build new nuclear power stations.”
