KPMG refutes Hinkley Point C ‘conflict of interest’
KPMG has hit out at claims it was one of several consultancy firms to be involved in conflicts of interest when advising the government on the Hinkley Point C project, pointing out it did not have a role as a financial advisor to EDF, one of the two partners in the new nuclear power station
4 Jan 2018
Hinckley Point C is the first new nuclear power station to be built since 1995. The government’s deal is with NNB Generation Company (HPC) Ltd (NNBG), which is owned 66.5% by EDF and 33.5% by CGN.
A recent report in the Times newspaper alleged there were a number of conflicts of interest in the way in which the contract was conducted. The paper said KPMG was paid £4.4m between 2012 and 2017 as a financial adviser to DECC and the Department for Business, Enterprise and Industrial Strategy (BEIS), despite telling officials that it was also acting for CGN on the project.
However, KPMG has put out a statement saying: ‘KPMG was appointed as DECC’s financial and commercial advisor in July 2012, to advise DECC in the negotiation of the contract for difference with EDF. A commercial agreement between DECC and EDF was reached in October 2013.
‘KPMG was subsequently appointed by CGN in March 2014 to act as their financial advisor on the Hinkley Point C deal with EDF, providing financial advisory, diligence, tax and accounting advice to CGN alongside a wider team of advisors.
‘DECC was consulted and granted permission, prior to KPMG being appointed by CGN. KPMG put robust processes in place to identify and manage potential conflicts of interest, including the use of separate “ring fenced’ teams”.
‘KPMG did not work for EDF as a financial advisor on Hinkley Point C.’
Both the National Audit Office (NAO) and the public accounts committee (PAC) published reports critical of the financial management of the Hinkley Point C project last year.
The deal agreed guarantees that NNBG will receive £92.50 (2012 prices), linked to inflation, for each megawatt hour (MWh) of Hinkley Point C’s electricity for 35 years, with electricity bill payers paying top-ups if the market price is lower.
In its report PAC said: ‘The committee is concerned consumers are locked into an expensive deal lasting 35 years and that the government did not revisit the terms between the original decision to go ahead and now, despite estimated costs to the consumer having risen five-fold during that time.
‘Over the life of the contract, consumers are left footing the bill and the poorest consumers will be hit hardest.
‘As the financial case for Hinkley has weakened, the government has talked up the boost to jobs and skills that Hinkley will generate. But the government has no clear plan of how these so-called wider benefits will be achieved, or crucially how it will measure success.’
For its part, the NAO characterised the deal signed by BEIS as ‘a risky and expensive project’.
NAO head Amyas Morse said: ‘The department has committed electricity consumers and taxpayers to a high cost and risky deal in a changing energy marketplace. Time will tell whether the deal represents value for money, but we cannot say the department has maximised the chances that it will be.’
The NAO report on Hinkley Point C is here.
The PAC report is here
Report by Pat Sweet