By Inti Landauro in Paris and Selina Williams in London 

Plans to build the U.K.'s first new nuclear plant in a generation were unexpectedly delayed after the British government postponed making a final decision on the controversial GBP18 billion ($23.7 billion) project until the fall.

The news came late Thursday, just hours after French state-controlled power utility Électricité de France SA's board voted to approve the project at Hinkley Point in Somerset, southwest England.

"The government will now consider carefully all the component parts of this project and make its decision in the early autumn," U.K. Business and Energy Secretary Greg Clark said.

A spokeswoman for the Department for Business, Energy and Industrial Strategy said the delay doesn't mean that the project has been scrapped. The new government wants to take some more time to assess the project, she added.

The sudden announcement by the U.K. government, which caught the French company by surprise, shows the lingering effects of the political instability in the U.K. after the country's June 23 vote to leave the European Union.

"There is a new government in the U.K. and it now says it wants to evaluate the project," EDF Chief Executive Jean-Bernard Lévy said. "I was informed at the same time as you were," he told reporters on Friday morning.

EDF had expected to sign contracts to build two nuclear reactors on Friday.

Shares of EDF were up 8.5% at EUR11.93 ($13.23) in midday Paris trading, leading the SBF120 midcap stock index. Besides the prospect that EDF might avoid the heavy risks associated with Hinkley Point, investors were also encouraged by the company's first-half results. Earnings before interest, taxes, depreciation and amortization, a measure of cash flow, were EUR8.94 billion, above an analyst consensus provided by the company that expected EUR8.65 billion.

The company also said it had extended the lifetime of most of its nuclear reactors in France by 10 years, meaning a slowdown in their depreciation in the company's books.

The Hinkley Point project has proved controversial in both France and the U.K. Some senior EDF officials and labor unions are worried about its impact on the company's finances, while some politicians and environment groups in the U.K. consider it too expensive and risky.

The six labor-union representatives sitting on EDF's 18-member board have repeatedly opposed the project. Another board member, Gerard Magnin, resigned moments before the vote. According to Le Monde newspaper, he quit in opposition to the project. His departure follows the resignation earlier this year of the company's chief financial officer, Thomas Piquemal, over the project.

Even though the U.K. government guaranteed EDF and its Chinese partner a price for the electricity generated by the reactors significantly above market levels, unions and several company officials have said the costs will saddle EDF with too much debt.

Paul Marty, a senior credit officer at Moody's Investors Service, said EDF's approval of the Hinkley Point project was negative for the company's credit because of the size of the investment and execution risks.

"Should the project go ahead, the significant scale and complexity of this project are likely to affect both the group's business and financial risk profiles as EDF's balance sheet will have to shoulder the financial implications of a very long construction phase during which the investment will not generate any cash flow," Mr. Marty said.

In the U.K., the guaranteed electricity price of GBP92.50 a megawatt hour for 35 years has been criticized. The level is more than double the current wholesale power price in the U.K.

Concerns have also been raised that two other projects in Europe using the same reactor technology are years behind schedule and billions over budget.

The French government has backed the project and announced a cash injection of EUR3 billion into EDF to help the company develop the project, which would lead to job creation in France and buoy beleaguered state-owned nuclear firm Areva SA, which manufactures nuclear reactors.

Nicholas Winning in London contributed to this article.

Write to Inti Landauro at inti.landauro@wsj.com and Selina Williams at selina.williams@wsj.com

 

(END) Dow Jones Newswires

July 29, 2016 08:21 ET (12:21 GMT)

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