DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/040)
issued by The Government News Network on 22 February 2008
New nuclear power
station operators will be required by law to set aside money from
day one of generating electricity for their eventual
decommissioning and waste costs, Business Secretary John Hutton
made clear today.
Draft guidance published today sets out how clauses in the Energy
Bill requiring operators of new nuclear power stations to meet the
full cost of decommissioning and their full share of waste
management costs would work.
Companies would be required to:
* Demonstrate detailed and costed plans for decommissioning,
waste management and disposal, before they even begin construction
of a nuclear power station;
* Set money aside into a secure and independent fund from day one
of generating electricity; and
* Have additional security in place to supplement the Fund should
it be insufficient, for example, if the power station closes early.
In ensuring these safeguards, the Secretary of State will draw on
expert advice from the soon to be established Nuclear Liabilities
Financing Assurance Board.
Mr Hutton said:
"Last month I invited energy companies to bring forward
proposals for new nuclear power stations and we are already taking
steps to facilitate this. It is in the national interest that the
energy industry is able to invest in secure low carbon energy sources.
"But it is also in the national interest that we take every
step to ensure that the taxpayer is protected from the clean up
costs down the line. The Energy Bill and the guidance published
today make clear that companies are liable by law to meet their
full costs.
"Let me be clear - full means full. Funds will be
sufficient, secure and independent, it will be a criminal offence
not to comply with the approved arrangements and we are taking
powers to guard against unforeseen shortfalls."
The draft guidance, published for consultation, will assist
businesses in understanding their obligations under the Energy
Bill, and what is required for a Funded Decommissioning Programme
to gain approval.
Included is an indicative timeline by which the Government
expects to publish its updated estimates of the costs of
decommissioning and managing and disposing of the waste from new
nuclear power stations, and therefore be in a position to set a
fixed unit price for disposal of intermediate level waste and
spent fuel. This fixed unit price will be set at a level over and
above expected costs and will include a significant risk premium,
to provide the taxpayer with material protection.
We consider that a decision by an operator to proceed in
principle with building a new nuclear power station and therefore
to request from the Government a fixed unit price for waste
disposal in a Geological Disposal Facility could come as early as
mid 2009.
Notes for editors:
1. This consultation on the draft guidance will end on the 16 May
2008 and follows the publication of the White Paper on Nuclear
Power on 10 January 2008. The White Paper announced the
Government's formal response to the consultation on the
future of nuclear power, that it would be in the public interest
to allow energy companies the option of investing in new nuclear
power stations.
2. Under the Energy Bill, operators of new nuclear power stations
must produce a Funded Decommissioning Programme for approval,
which consists of two parts: a Decommissioning and Waste
Management Plan and a Funding Arrangements Plan.
3. "Full decommissioning costs" are the costs for:
dismantling the plant at the end of its operational life; and,
returning the site to a condition agreed with the regulators
(likely to be a state suitable for restricted use, industrial or recreational).
4. The "full share of waste costs" means: The costs
that are directly attributable to disposing of new build waste in
a geological disposal facility; and, a contribution towards the
fixed costs of building a geological disposal facility.
5. The first set of draft guidance (Part 1 - Decommissioning and
Waste Management Plan Guidance) will assist businesses in setting
out and costing the steps involved in decommissioning a new
nuclear power station and managing and disposing of radioactive
waste and spent fuel in a way which Ministers may approve.
6. The second set of draft guidance (Part 2 - Funding Arrangement
Plan Guidance) will assist operators in setting out acceptable
proposals for how sufficient funds will be accumulated to meet the
costs identified and sets out the guiding principles against which
the Government will assess the funding proposals submitted by
nuclear operators for approval under the Energy Bill.
7. The guidance flows from the clauses in the Energy Bill and can
only be finalised after Royal Assent of the Bill. The
consultation on draft guidance runs from today until 16 May 2008.
8. This guidance is statutory and will be laid before Parliament
to ensure transparency. As guidance it cannot compel, but taken
together, it is intended to set out the matters which the
Secretary of State may take into account in determining whether to
approve or approve with modifications, or modify a Funded
Decommissioning Programme.
9. This guidance is expected to be of interest to nuclear
operators as they will be responsible for submitting Funded
Decommissioning Programmes, ensuring that financial security is
provided, and, taking the technical steps set out in the approved
Funded Decommissioning Programme as necessary. The guidance is
also expected to be of interest to other stakeholders, including
environmental organisations, investors, regulatory and consumer
bodies and local communities.
10. Dr Tim Stone, a senior financier with experience of major
capital investment projects, was appointed in January 2007 to
advise the Secretary of State for BERR and the Chief Secretary to
the Treasury on financing the costs of decommissioning, waste
management and waste disposal for new nuclear power stations. The
clauses in the Bill and the draft guidance published today for
consultation are the result of this work.
11. Full documents are available for comment at http://www.berr.gov.uk
12. The Department for Business Enterprise and Regulatory Reform
helps UK business succeed in an increasingly competitive world.
It promotes business growth and a strong enterprise economy, leads
the better regulation agenda and champions free and fair markets.
It is the shareholder in a number of Government-owned assets and
it works to secure, clean and competitively priced energy supplies