The Sizewell C 'RAB' Abomination

A couple of weeks ago at Mr Wendland's prompting, I undertook to post on the putative Sizewell C contract, currently "under negotiation" with EDF and various financial parties.  I'd said it was worse than the Hinkley Point contract - hard to believe, but true.  We know it will be on a "Regulated Asset Base" footing, which has been used in the USA and elsewhere since time immemorial but in this SZC manifestation has some nasty new twists.  Other aspects are broadly known, but as with Hinkley, the final document will be secret, so there's always a limit as to what we'll get.  (There are aspects of Hinkley we only know because the EC published them.) 

Anyhow, I was duly working up a post; but this morning have been handsomely beaten to the punch by the redoubtable Citizens Advice in their response to a consultation.  Well, a very big hat-tip to them, and here's the link.  Adjusting for the fact that their language is naturally diplomatic, you can't do better than read this to get the full horror of what's being proposed.  It's only 16 pp - but if you're pushed for time, just the first 3 pages gives you the basics.

ND

Government introduces its stellar defence procurement skills to energy sector!

+ + UPDATED + +   - see below

Defence projects are the bane of the taxpayer's existence.  (Along with NHS IT projects, PPS procurement etc etc etc).  Astonishing delays, budget over-runs, faulty products - all followed by rinse-and-repeat with exactly the same contractors.  Learn nothing; repeat; and get the same results.  Never fails.

And now we have HMG's pathetic attempts to get a new generation of nukes up and running.  I say 'new', but the EPR is by now a pile of discredited and distinctly old crap.  And yet, conned by EDF, stitched up by George Osborne, bullied by Francois Hollande and betrayed by her own personal weakness of character, in 2016 Theresa May signed up for the Hinkley Point 'C' contract, the exact terms of which we may never learn: but we know enough to say they are awful.  All the optionality - and it's very great indeed - lies with EDF.  What's more, EDF knows that if it huffs and puffs and lies a bit more, it can get unilateral, favourable changes to this one-sided contract that are even further in its favour.  For example, not long ago it obtained a three-year relaxation to the back-stop date for start-up, from 2033 to 2036.  That's for a project it initially said would start up by year-end 2017! (sic)

So after this week's update from EDF, where are we now?  Start-up-date maybe 2031 or 2032 ... cost, well anyone's guess really, but wildly higher than any number floated before.  And this just days after HMG put around £2.5 bn cash (that's c.a.s.h., upfront, not just a high HPC-type electricity price) into Sizewell 'C', the next monstrous would-be product of EDF's nuclear fantasy.  The big difference with SZC being that, unlike HPC where EDF has to swallow the over-runs, with SZC the taxpayer will do that because EDF has no intention of taking on any construction risk at all.  And Boris signed up for that (not just May, then, who's an airbrained git).  

Did I say EDF has to swallow the over-runs on HPC?  Well, thus far, that's what the contract says and that's how it looks.  But, lo!  The contract doesn't commit them to finish the project at all !  They just don't get to sell that pre-priced electricity if they don't.

However, we can all picture the scene.  It is 2034.  HPC looks sort-of finished, but beneath those big domes and concrete silos, vital bits are not yet ready - and EDF knows full-well they ain't gonna be finished by 2036.  So there will be no juicy, HMG-underwritten, 35-year electricity contract.  They've been cap-in-hand to President Le Pen for more money, but she's sent them away empty-handed.

They know what to do.  "Get Starmer in here" they shout, and he's duly brought in to hear their story.  

"Look here, Starmer, we've run out of money.  But you need the electricity really badly, right?  This HPC delay, and the parallel delay at SZC, have already scuppered your energy strategy, which assumed that BOTH plants would be up and running by 2030! (aside: hah!  that Ed Miliband, eh?  Sucker!!)  You've had three years of patchy blackouts already.  So: we need another, errr, let's say £4bn - well, make it £5bn, what's that between friends, hmm?  Now.  Cash.  And then - we PROMISE - we'll be up and running by Xmas 2037, just, errr, 20 years late.   And we'll have another little meeting - about SZC - next month.  Whadya say?  You don't really want to leave this thing standing here like a radioactive white elephant, do you??"

Watch and wait...

ND

UPDATE     ... but you won't be waiting for long!  See this story - published after I wrote the above post.  You (maybe) read it here first

Nuclear Finance: Stuffed by the French Again

Later this week, we're told, the long-trailed announcement will be made of a new approach to financing nuclear power plants in the UK.

As we've long been warmed up to accept, no company is willing to take upon itself nuclear construction risk.  That was just about all that remained in the lap of developers, after EDF had blazed the trail with the outrageous Hinkley Point C contract that May so cravenly signed back in 2016 under stern instruction of the miserable tadpole Hollande (thereby proving to the entire watching world she was unfit to conduct the Brexit process).  But EDF itself quickly signalled that if we wanted any more nukes the next deal would need to be even better.

(Note always that HPC is a not-quite-free option for EDF - they still have no obligation to complete construction of the plant.  It can be argued they have no idea how to do it anyway, seeing that Flammanville has been put back yet another few years ...)

Still, the frogs are dangling the next one, Sizewell C, before the desperate eyes of HMG - and of course the Chinese and Japs and Koreans can all make their own offerings - if the contract is rich enough, and free of risk for themselves.

The chosen financing model to gratify their rapacity is the Regulated Asset Base model.  Details are awaited; but it's a familar enough tool, used across the USA in various forms for decades, and latterly for that grotesque and unnecessary project, the Thames Tideway.  But familarity alone is no recommendation.

The lazy headlines are that the 'taxpayer' stands to pick up the tab for the inevitable monstrous cost overruns.  Maybe; but it's even more likely it will be the poor old electricity bill-payer, which may seem a fine distinction but it highlights an important point.  Everyone needs electricity (and water) and their utility value to all of us is so great, we can be made to pay almost anything for them.  No new taxes required.  By these means we can be, have been, and will again be screwed into the ground, giving foreign firms the right to enjoy themselves on a grand scale at our expense for many decades to come.

The only possible argument in favour is that nukes have only ever been built by public finance, so we may as well don the nose-pegs and get on with it.  That assumes we need them at all - and I say we don't.  Or, if we do, we're f****d, because manifestly the French don't know how to build them within, say, 10 years of their airy estimates - so we'll always need large-scale Plans B, C and D.  Why not just settle for a good, cost-effective Plan B and have done?

Anyhow, knowing that several of our BTL regulars actually favour new nukes - have at it in the comments!

ND

May's Legacy is Worse Than Brexit Failure

“There is a great deal of ruin in a nation"   (Adam Smith)

We are not yet holed below the water line; but a lot of the rigging has been shot away, and ammunition expended.  Captain May had no idea how to fight the ship (who does?) but lost important early actions, and has steered us incompetently into dangerous waters.  Mutiny threatens.  The sharks are circling; and the depths below us are unplumbed.  Brexit?  That's just for starters.

How much of our present plight can fairly be laid at May's door?  It is not clear to me which plausible alternative Tory PM would for certain have commenced a purposeful Brexit camapign in 2016, knowing (as we now do) that the Civil Service is not up to, nor up for, the tasks that necessarily come their way in this regard.  Which of Gove, Johnson, or Leadsom (I discard Crabb, Davis and Fox) would have taken the necessary steps in the necessary timeframe - setting proper expectations; immediately hiring the best negotiators and lawyers the City has to offer; making Civil Service obstruction a pension-forfeiting offence; moving onto a 'war' footing on every front - to give the enterprise its best chance of success?

But there are two monstrous mis-steps that are May's and May's alone.  The first is symbolic, the second diabolic.

One of her first acts as PM was to call in the Hinkley Point C decision.  As was right and proper: this was always an Osborne project and the panicky French realised it was at risk.  After years of prevaricating (and still to this day with no final design for the business end of the reactors!) they rushed to sign the draft agreements at a speed which betrayed their utter desperation.  Ho ho.

So what happened next?  Did May parlay this into Brexit-enabling commitments by the Frog?  Did she hold Hinkley hostage against a successful Brexit outcome?  Nope: Hollande told her sternly to sign without further ado and, meekly, she did.  A clear omen of the awful things to come, as we confidently predicted at the time.  This was a May classic, signalling to the whole of the 27 that she was there for the taking.  And I really don't imagine any other PM would have enacted this craven calamity.

The second, though, could have much longer-lasting consequences.  This was the 2017 GE - not the calling of it per se (for which there was a fair rationale), but her disastrous, hubristic personal conduct of it**.

Because Corbyn was there for the slaughter.  Had the campaign been just one week shorter she would have returned with a majority.  Had it not included several wholly avoidable faux pas, that majority could have been pretty decent.   This might have been helpful in the Brexit context, or not (given that Dominic Grieve would still have been one of those MPs) - but that's not the point.

The point is that Corbyn would have been defenestrated.

At Labour HQ, the coup was ready, the locks had been changed, and the marxists would have been sent back to their rightful obscurity to rant at each other in dingy halls.  By giving Corbyn a new lease of life, May has given every 'woke' bedsit dweller of whatever age to understand that there is an alternative to rolling back under their sordid duvets in apathetic political lassitude.   We weren't crushed at the election.  Hell, if we all glue ourselves to a bridge, we can change the world!   And so every idiot malcontent is now crawling out of bed, possessed of the idea they can realise their fondest fantasies.

For ordinary folk wishing simply for the world to be competently run, it is really quite important that fantasists with too much time on their hands confine their crapulous activities to passing motions in the students union.  As will always be the case in a benign democracy, if they all turn up at once there are too may of them to be restrained by reasonably peaceful means.  For many a long decade, they haven't chosen to force the point (at least, not in this country), thus enabling honest people to get on with their lives.

I greatly fear that their tails are well and truly up now, and that they will be increasingly strident - and gratified - in their demands.  Not, of course, that most of what they want can actually be delivered (although some of the nastiest gesture-politics can be), but that craven politicians pander to them as though it can (witness "legally binding" targets for CO2 emissions, which is only the start).  Such nonsense and waste of resources can go on for years before the gig's up, as it always will be eventually.

And of course in the ranks of the politicos are not only the craven, but the unscrupulous: slavering at the prospects of enlisting these idiots as a battering-ram for their *Revolution*.  If Tusk is right about there being a special place in Hell for those who pretended Brexit would be easy, there's an even hotter spot for those who would direct a Children's Crusade.

A better result in GE 2017 could have sent the innocents home sadder and wiser.  By screwing up, May has put wind in their sails.  Will habitual idleness, short attention-span or frustration with Corbyn's fence-sitting be enough to send them back to their games consoles?  Perhaps.  But maybe not.

"The impatience, bordering into contempt, for the political class and the amount of hostility and borderline violence is something we have not known for a very very long time."  (Damian Green, this morning)

ND 

** and we never wish to hear again from Nick Timothy, either
 

Will anything, ever, make Nick Drew Vote UKIP?

OK, so UKIP are not in a very good state at the moment. As I wrote here a week or two ago, they are desperately in need of not just a new leader but a new brand and purpose too.


So it is no very auspicious to be cheering for them.


However, according to ITV, Hinkley is going ahead.


Clearly, PM May got a good hiding in Beijing and also by the French, being told all sorts of horrors if we did not commit - i.e. no investment and BREXIT impasse respectively.


But, it is , quite clearly lunacy, the most expensive white elephant since the NHS single IT system was conceived, in fact it will be worse.


All as renewables and battery storage, not to mention Fracking, have completely overtaken the need for nuclear power in its current form.


Let's face it, looking across at Flamanville we know the project does not even work and the technology is still unproven.


Despite all that PM May is going to wave it through. So, to our own Mr. Drew, how does that sit with you!

Australia shows the way

Obligatory Sporting Vague Link

It is hard to fathom really how the UK is still even thinking about going ahead with Hinkley Nuclear Power station. The facts have simply changed beyond all doubt since its inception, before we even get to the pathetic deal that was negotiated.

Meanwhile, the Chinese have made noises about how unhappy they will be if we pull out. This is really code for if you don't buy French, then buy Chinese direct. I think they are onto a loser with that line of thinking.

In a nice twist, the Aussies have today decided to stop China buying their power grid. Nice as the Chinese are they do have this rather well earned name for massive cyber attacks and economic cyber crime. I would agree that selling them the kit that runs a country is not such a good idea.

Sadly in the UK we have long since sold all key industrial backbone abroad, albeit we retain National Grid (it is a listed company though, so vulnerable). I am less worried by the French and Germans though as state entities.

So with the Aussies bravely clearing the way, perhaps Mrs May can do the decent thing and put Hinkley out of its misery and get on with fracking/gas alternative which won't be as cheap or as quick as we need, but is a lot better than the current impasse.