It’s EdF not Hinkley

The Leveller® has paid a lot of attention to the issues arising around the building of Hinkley C. The nuclear power station being built by EdF is modelled on the over budget and still not finished Flamanville plant in Normandy.

However the latest widely reported issue to hit Hinkley C doesn’t have a lot to do with Somerset. It has far more to do with the Paris Bourse (stock exchange) on which EdF is listed.

It has been reported that EdF has been fined €5m and the former CEO Mr Henri Proglio, was handed down a personal fine of €50k. What has not been widely reported was that the financial regulator, Autorité des Marchés Financiers actually asked for a fine of €11m.

Two accusations were made against EdF and although they do concern Hinkley C, it is nothing to do with the construction. The investigation by AMF was into insider trading and the way in which EdF disclosed information to the French Bourse.

EdF produced a news release on 8 October 2014 announcing the approval of the Hinkley project by the European Commission under state aid rules. This was an essential part of the process. EdF is controlled by the French Government, and the viability of Hinkley was propped up by the British Government guaranteeing a minimum price per kilowatt hour.

EDF informed the market that following the decision of the Commission, “the main elements of the agreements of October 2013 remained unchanged […]”.

This was actually untrue. AMF found there had been significant changes to the financing plan. And that EdF had disseminated false information “likely to set the share price at an abnormal or artificial level“. However the company was cleared of a second charge of insider trading.

This is yet another embarrassment for EdF. However it is unlikely to have a big impact on Hinkley C. The fine of €5m pales into insignificance next to the cost overrun on the original £18bn budget. To date that stands at somewhere between £3.5 and £4.5bn.

EdF share price closed the week at €8.55. For the sake of context, the company was floated on the Bourse back in 2006 at €32. The real concern for the future of Hinkley arising from this story, is that as the viability of EdF is called into question, will it have the capacity to finance the completion of the project.

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