UK government confirms rise in nuclear clean-up cost to GBP70 bil

UK government confirms rise in nuclear clean-up cost to GBP70 bil

London (Platts)--30Mar2006

The Nuclear Decommissioning Authority's (NDA) strategy published Thursday
that sets out for the first time how the UK will tackle the clean-up of its
historic nuclear facilities confirms the estimated cost for this has risen to
GBP70 billion from GBP56 billion, NDA spokesman Brian Hough told Platts.
The strategy--which was subject to a three-month public consultation last
year--sets out a comprehensive plan for the decommissioning and clean-up of
the NDA's 20 civil nuclear sites. The revision of the figure is significant,
sources said, since the government is still in the middle of an energy
review--expected to be unveiled this summer-- and has yet to decide whether to
go ahead with a new generation of nuclear power plants. In publishing the
report, the NDA confirmed that its had received government apporval for its
strategy and that UK Secretary of State for Trade and Industry Brian Johnson
would address the House of Commons Thursday on the sale of British Nuclear
Group (BNG), the nuclear clean-up arm of British Nuclear Fuel (BNFL).
The NDA's life cycle baseline assessment of GBP56 billion in 2004 rose to
GBP62.7 billion in 2005. The authority already identifies a further needed
GBP7.5 billion that will be refelcted in its 2006 assessment. "You would be
quite right to calculate that the cost is predicted to rise to GBP70 billion,"
spokesman Hough said.

SELLAFIELD CLEAN UP MOST COSTLY
The total cost covers the clean-up of the 20 sites for which the NDA is
responsible only, with Sellafield in Cumbria being the most expensive. Any
further increase depends on the amount of waste found at a site and the time
needed to decommission it. In Sellafield's case this is 75 years, Hough said.
"That's why the government has given us till 2008 to reach a copper-bottomed
figure," he said, adding, "It takes time to work out the legacy we've
inherited."
NDA Chairman Anthony Cleaver said in a statement that gaining a much
better understanding of the costs associated with delivering its remit had
been one of the authority's most significant achievements over the past 12
months.
"We are today publishing new site life cycle baselines which together
total GBP62.7 billion, but we have also identified a potential further GBP7.5
billion of costs that will be included in the 2006/7 estimates. Within these
overall totals are the cost of our income generating commercial operations at
GBP14 billion and the cost of decommissioning and clean-up at GBP56 billion."
However, NDA said there are a range of factors, some of which are the
subject of government policy reviews, which will require further assessment.
"We are targeted to establish the full costs of clean-up by 2008 and so this
remains work in progress," the NDA said.
The authority's priorities for the coming year are to launch its first
competition--the contract to manage and operate the low-level waste facility
at Drigg--and, by April 2007, issue a new Sellafield contract as part of the
sale of BNG. It also intends to undertake consultations on the best approach
to addressing socio-economic issues; to review site end states with
stakeholders and to evaluate the business case for accelerated decommissioning
for Magnox and other reactor sites.

KEY PRINCIPLES
Key principles established in the strategy include: prioritising safety,
security and the environment by making the reduction of high hazards its key
focus; an aspiration to deliver accelerated decommissioning wherever feasible;
a competition schedule to create a strong competitive market that will achieve
value-for-money for the taxpayer; maintenance and development of skills;
effective stakeholder engagement; the provision of socio-economic support for
communities directly affected by decommissioning and clean-up.
Cleaver said the NDA was confident that its approved strategy provided
the best approach--in terms of safety, cost efficiency and sustainability--to
tackle the UK's historic 60-year nuclear legacy.
"Central to the strategy is the competition schedule and, as a result of
considerable feedback during the consultation period, we have revised this in
a way which also accommodates the sale of BNG. We believe our schedule sets
ambitious but realistic targets that will create a strong competitive market.
The government's decision to approve a sale of BNG brings the benefits of
competition, by way of a sale, to our biggest site, Sellafield, earlier than
in our original schedule," he said.
By offering a five-year contract to the new owner the NDA said its aim is
to provide the incentive to drive strong performance improvements while also
providing a period of stability for the site.
Approval of the NDA's strategy within its first year is the culmination
of a "range of significant achievements," NDA said, including: delivering real
savings on the first year's work program; progress towards the creation of a
new, industry-wide pension scheme; progress on the skills agenda, including
initiatives to establish a Nuclear Skills Institute and a National Nuclear
Skills Academy.
---claire-louise_isted@platts.com

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