Source · Select Committees · Public Accounts Committee
Recommendation 12
12
In 2015, the then Shareholder Executive, on behalf of the Department undertook a review of...
Conclusion
In 2015, the then Shareholder Executive, on behalf of the Department undertook a review of the arrangements with EDFE for decommissioning the AGR stations. It concluded that the existing agreements did not incentivise EDFE to look at more innovative or cost- effective ways to minimise decommissioning costs. Between late 2017 and June 2021, the Department negotiated new arrangements with EDFE which included a new incentive arrangement focused on defueling.18 Under the revised arrangements agreed between the Department and EDFE that govern the decommissioning of the AGR stations, the company can now earn a fee of up to £100 million for good performance, or it could lose up to £100 million for poor performance. Most of the financial incentive is devoted to incentivising accelerated defueling with the remainder for delivering a smooth transfer.19
Government Response
Not Addressed
HM Government
Not Addressed
5: PAC conclusion: We are not convinced the Department has struck the right balance in incentivising the NDA and EDFE to deliver safe and efficient defueling of the AGR stations on time while reducing costs. 5: PAC recommendation: The Department should write to the Committee within six months outlining how it will assure itself that the incentives are working and setting out the actions it will take if the incentives are not working. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: November 2022 5.2 The department accepts the Committee’s recommendation and will respond to the Committee by November 2022, outlining the governance and oversight for monitoring the impact of the incentive on delivery and how that indicates effectiveness of the mechanism.