EDF (Strike Price Negotiations)

Energy and Climate Change – in the House of Commons at 9:30 am on 31 January 2013.

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Photo of Martin Horwood Martin Horwood Liberal Democrat, Cheltenham 9:30, 31 January 2013

What recent progress has been made on strike price negotiations with EDF.

Photo of John Hayes John Hayes The Minister of State, Department of Energy and Climate Change

Shale gas has exciting potential, but we need to—

Photo of John Hayes John Hayes The Minister of State, Department of Energy and Climate Change

I was racing ahead of myself for a moment, Mr. Speaker.

Discussions are ongoing, with the aim of finding a fair, affordable, value-for-money deal. No commitment has been made on commercial terms or the strike price.

Photo of Martin Horwood Martin Horwood Liberal Democrat, Cheltenham

Another interpretation of those ongoing discussions is that they are offering a consumer subsidy to the French state nationalised energy company Électricité de France in a mature market, without much competition, and in advance of the relevant legislation. Should that not be subject to proper parliamentary scrutiny?

Photo of John Hayes John Hayes The Minister of State, Department of Energy and Climate Change

As I have already said, the strike price that we agree and the process that leads up to that agreement will indeed be subject to such scrutiny, because we will be transparent about the arrangements that we make. Let me be perfectly candid. If this deal does not stack up, we will not proceed with it. It must be in the interests of taxpayers and it must be fair, although of course it must be commercially attractive as well. The negotiations are going ahead, and it would be inappropriate for me to say more about them, but I will say that this can be a win-win for our future.

Photo of Barry Gardiner Barry Gardiner Labour, Brent North

The Minister is right to say that the deal must be in our interests, but that cannot be known until after the fact of the agreement on the strike price. The key problem with the strike price is a perverse incentive to overestimate the construction costs on which it will be based. If it is subsequently found that those costs are lower than the estimate, the consumer will be paying more for the strike price that the Department has agreed. Why did the Minister and his colleagues on the Government Benches vote against our amendments to the Energy Bill, which would have made transparency essential to the entire process?

Photo of John Hayes John Hayes The Minister of State, Department of Energy and Climate Change

Because we have said that we will publish an investment contract concerning details of the strike price. The hon. Gentleman, who is an experienced Member of Parliament, knows that the process of negotiation itself is bound to deal with commercial matters that are sensitive, and is bound to deal with trade secrets which, as he acknowledged in the Bill Committee, cannot be published. He also knows that it might be subject to all kinds of other matters that it would be inappropriate to debate now. However, we are clear about this: we will be transparent, and we will be straightforward.