Chisholm to become UK chair of energy giant EDF

Alex Chisholm led BEIS when it struck Hinkley Point C deal with energy giant in 2016 but watchdog says risk of foul play is minimal
Photo: Louise Haywood-Schiefer

Former civil service chief operating officer Sir Alex Chisholm is to become UK chair of the energy giant EDF, years after running the department that brokered a deal for the French company to build a new nuclear power station.

The appointment was revealed in a letter from the Advisory Committee on Business Appointments, which noted that there is “direct overlap” between Chisholm’s new private sector job and his former role as permanent secretary at the Department for Business, Energy and Industrial Strategy. Chisholm led the now-defunct department for four years until 2020, when he moved to the Cabinet Office.

“Most notably”, the letter said, in 2016 BEIS was responsible for the decision on finalising the first Contract for Difference, with respect to EDF and the construction of Hinkley Point C.

The year after the contract was awarded, the National Audit Office released a highly critical report calling it a "high cost and risky deal". The NAO said BEIS had failed to explore alternatives to the funding model created for the Somerset nuclear plant that could have cut project costs and taxpayers’ exposure to risk.

The project, under which construction of the power station is funded by taxpayers over 35 years, is expected to cost at least £31bn, up from an initial estimate of £18bn. It is not expected to be completed until 2031, some 14 years behind schedule.

In 2017, Sir Stephen Lovegrove, a former perm sec at one of BEIS's predecessor departments, said the idea of a better deal was "fanciful" and that the contract with EDF would have collapsed had the department tried to renegotiate terms.

Despite acknowledging Chisholm's role in the process, Acoba said the ultimate decision on the pricing mechanism lay with the then-business secretary, and “followed the 2014 approval from the European Commission and was based on terms agreed then, 10 years ago”.

“Significantly, due to the period of time that has elapsed, the committee did not consider Sir Alex could reasonably be seen to have influenced this decision in anticipation of an offer of work a decade later,” it said.

There was also some overlap between Chisholm’s new job and his responsibilities in his most recent role as COO and perm sec at the Cabinet Office, which he left in April – although Acoba said he was not responsible for decisions benefitting EDF in this post.

Chisholm was involved in resilience planning around energy supply during the energy crisis in the winters of 2021-22 and 2022-23.

He also co-chaired the Major Projects Review Group, which reviewed initial stages of the construction of Sizewell C, another nuclear power station. The group provided advice to the Treasury, which was responsible for setting conditions to be attached to funding that had been allocated to the construction project.

Acoba noted that Chisholm had met EDF in June 2020 and June 2022 “as one of a number of stakeholders briefed by the company on the progress of construction work at Hinkley Point C”.

The watchdog said that Chishom’s civil service experience will have given him “access to a wide range of information that could potentially provide an unfair advantage to a broad range of organisations”.

But it said the risk that he may have sensitive information that might offer EDF an unfair advantage is mitigated by a number of factors. As well as the four-year gap since he left BEIS, the committee acknowledged structural changes to the department – the remit of which has since been split into three ministries including the Department for Energy Security and Net Zero, which is now responsible for energy.

“In the meantime, the energy market is volatile, reacting to geopolitical events and the current climate differs greatly from when Sir Alex was in post at BEIS,” the letter said.

As for his experience at the Cabinet Office, Acoba said information that Chisholm had access to during the energy crisis “is now out of date and has since been published”.

Both departments had confirmed Chisholm “no longer has access to commercially sensitive information”, Acoba said.

As is standard with high-level civil servants, Chisholm is subject to a three-month waiting period between leaving office and starting his new job as non-executive chair. Acoba did not impose any additional restrictions on the role.

“There are inherent risks associated with any senior official joining a commercial organisation that undoubtedly seeks to influence government, whether in respect of energy policy, or the specifics of projects it is in partnership with government to deliver, for example: Hinkley Point C and Sizewell C,” the letter read.

“Sir Alex noted EDF’s significant relationship with government as part of the UK’s national infrastructure. He told the committee he did not wish to be precluded from wider policy discussions, such as at roundtables and industry events; or from meeting government where asked to do so by officials/ministers, noting the government is required to meet with EDF on occasion.”

Former perm secs are subject to a two-year ban on lobbying after leaving office – meaning that Chisholm “must avoid engaging in activity that could reasonably be seen as seeking to influence government decisions”, including regulatory decisions made at arm’s length from government, such as by Ofgem.

Despite Chisholm’s assurances that he does not intend to “influence government policy or work on commercial and funding matters”, the committee said there “remains a risk that EDF will be seen to benefit from Sir Alex’s potential influence and that the company may wish to make use of his network within government”.

It therefore sought confirmation from EDF that Chisholm’s role complies with the business appointment rules for former top civil servants and ministers.

“EDF has told the committee it understands and respects the conditions set out in this advice and confirmed  it will support Sir Alex in adhering to the conditions,” the letter said.

“EDF said it would ensure Sir Alex is not involved in lobbying, in negotiating future contracts, nor in advising on the terms in bids to government for future contracts or funding. Further, it would incorporate the conditions set out in this advice into its own internal governance arrangements.”

In an announcement of Chisholm's appointment, Simone Rossi, EDF's chief executive in the UK, said: “Sir Alex brings great private and public-sector leadership, governance and regulatory experience that can help steer the company’s efforts to help Britain achieve net zero.”

Chisholm said the appointment comes "at a time of great change and opportunity in the energy sector".

"EDF continues to invest in nuclear, wind, solar and battery infrastructure to offer customers secure, clean and affordable electricity. I look forward to getting to know all parts of the company, and to helping EDF serve the needs and priorities of the UK,” he said.

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