Alan Brown – 2015 Parliamentary Question to the Department for Energy and Climate Change

The below Parliamentary question was asked by Alan Brown on 2015-10-19.

To ask the Secretary of State for Energy and Climate Change, pursuant to the Answer of 15 October 2015 to Question 11217, what rate of non-guaranteed reasonable profit has been included in the calculated strike price.

Andrea Leadsom

The forecast rate of return is commercially confidential and is naturally subject to change as it will depend on the performance of NNB Generation Company Ltd. (NNBG), given that the Contract for Difference (CfD) is designed so that many of the risks belong to NNBG. The CfD contains a series of gainshare mechanisms in which consumers would benefit if the project construction costs or equity returns were more favourable than forecast.

However, although the actual number is confidential, the European Commission’s Closing Decision for the Hinkley Point C State aid case, where they judged the Strike Price to be proportionate, gives an expected range for the project rate of return of between 9.25 and 9.75% as of October 2014.

http://ec.europa.eu/competition/state_aid/cases/251157/251157_1615983_2292_4.pdf

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