Financial Advice for Nuclear

Description

he original costs for this contract (and related service) awarded in 2017 were historically forecast upon the Wylfa reactor programme. It was envisaged BEIS would then design a generic nuclear RAB model, the structure of which would then be passed to Ofgem to finish and implement. Therefore the exact nature of the required future spend to support other nuclear programmes (such as Sizewell C / SZC) was based on really high level estimate as the nature of those forthcoming programmes was not known at that time. During 2019 - 2020 HMG then had a change in policy direction. Wylfa had ceased to be a live project with the only largescale nuclear project remaining being SZC . At this point HMG did not want to pass lead responsibility to OFGEM to complete and implement. HMG kept the project lead and now has more responsibilities for the entire design (of the structure), negotiation and ongoing implementation. That means HMG and BEIS role is far greater than ever envisaged back in 2017. Therefore the spend has been faster and greater than was anticipated with the supplier PwC, for its financial advisory services. Going forward, any delay of support from PwC would significantly affect HMG's power of negotiation and subsequently affect EDF's confidence in HMG. This would create the risk of EDF possibly cancelling the entire project. Which in turn generates further risks for HMG - failing to deliver Carbon Budget no 6 target and the Prime Ministers 10 point plan. Due to the complex nature of the programme, the initial allocated budget of £4.5M since 2017 is being consumed faster than anticipated. The additional spend increase of £2,250,000 has been added to the contract