Extra £900,000 costs push up capital region’s payout after legal challenge over power station demolition

THE Cardiff Capital Region has confirmed a sizeable rise in the cost of a legal challenge over how it awarded a £30m contract to demolish the former Aberthaw Power Station.

- SION BARRY

The city region, made up of the 10 local authorities of southeast Wales, acquired the former coal-powered station, which occupies a 500-acre site in the Vale of Glamorgan, from energy giant RWE in 2022 for £8m.

Through its subsidiary business CCR Energy, it then entered a competitive procurement process which saw Erith winning the £30m contract to demolish the plant, as part of plans to eventually turn the site into a green energy park.

However, a successful legal challenge over how the contract was awarded was lodged by the losing bidder, Brown & Mason Group. In February the city region abandoned its legal defence with a settlement agreement of £5.25m with Brown & Mason. However, that figure did not include related legal and professional costs incurred by both parties.

The city region has now confirmed that those additional costs amount to nearly £910,000, bringing the total cost associated with the legal challenge to around £6.16m. The city region is also facing a six-figure bill for an independent review into the Aberthaw procurement process by professional advisory firm Deloitte. The findings of that report will determine whether the Wales Audit Office launches its own investigation. These costs have been met from the significant returns the region has generated from its lending activities. At the time the contract was awarded to Erith - which will benefit from the scrap value of the power station - the city region’s accountable body was Cardiff council. It carried out the procurement process for the demolition contract on behalf of the city region and CCR Energy, supported by external legal advice. Depending on the outcome of the Deloitte report, the city region could potentially seek legal redress for its costs, although the council is indemnified.