Paul Flynn – 2015 Parliamentary Question to the Department for Energy and Climate Change

The below Parliamentary question was asked by Paul Flynn on 2015-11-02.

To ask the Secretary of State for Energy and Climate Change, what the risk premium negotiated with EDF energy for the waste transfer contracts covering radioactive waste from Hinkley Point C is; and what advisers her Department appointed to assist in those negotiations.

Andrea Leadsom

The waste transfer contracts for the Hinkley Point C power station have been prepared in line with the approach set out in the Waste Transfer Pricing Methodology published in 2011.

As set out in the methodology, the contracts provide for the setting of a Waste Transfer Price for the provision of a waste disposal service. The Waste Transfer Price will be set at a level over and above estimated costs and include a risk premium to compensate the taxpayer for taking on the risk of subsequent cost escalation.

In line with the methodology, the contracts provide that the Waste Transfer Price, and hence the risk premium, is not set at the outset but instead is deferred for a specified Deferral Period to enable greater certainty over expected costs. Therefore the waste transfer contracts for Hinkley Point C do not specify a risk premium. Rather, the contracts set out how the Waste Transfer Price, and hence the risk premium, will be determined at the end of the Deferral Period and the approach in the contracts is in line with the published methodology.

DECC appointed Slaughter and May to provide legal advice in the negotiations on the waste transfer contracts for Hinkley Point C.