Press Release - The Nuclear Decommissioning Authority: Taking
forward decommissioning
30 January 2008
The Nuclear Decommissioning Authority has established the first
comprehensive programme to clean up the UK’s first generation of
public sector civil nuclear facilities. A report out today by the
National Audit Office shows that the Authority has made progress
but will need to tackle significant challenges if it is to ensure a
step change in the decommissioning of nuclear facilities in the
UK.
According to the report, estimated costs of decommissioning
continue to rise rapidly, even for the most imminent work which
might have been expected to have stabilised by now. Progress at
some decommissioning sites has been hampered by changes at short
notice to funds available, bringing uncertainty for sites and
lessening value for money. And the Authority needs to develop its
approach to contracting for decommissioning if it is to secure
value-for-money in the long run for the taxpayer.
The report found that the nature and scale of the
decommissioning task inherited by the Authority in 2005 was highly
uncertain. Many of the Authority’s sites had not been designed with
decommissioning in mind. And record-keeping, particularly in the
early days of nuclear development, had not always been sufficiently
detailed to inform decommissioning several decades later. The
Authority has invested significant effort in defining what needs to
be done and has introduced industry-wide procedures requiring its
sites to prepare plans on a consistent basis.
Plans for decommissioning individual sites have gone through a
number of iterations and cost estimates have increased
significantly. In part, this reflects a more complete assessment of
the range of work that needs to be taken forward. In 2007 the
Authority estimated that the undiscounted cost of decommissioning
its 19 sites over a 100 year period was £61 billion and that it
would cost a further £12 billion to run operating sites to the end
of their commercial life. This total lifetime cost of £73 billion
was almost £12 billion (18 per cent) higher than the 2005 estimate.
Point estimates of decommissioning costs must be interpreted with
great caution, and in the knowledge that uncertainties will tend to
be greater for more distant tasks.
Between 2005-06 and 2007-08 the Authority’s budgeted
grant-in-aid increased from £1,178 million to £1,420 million. This
has enabled significant resources to be allocated to
decommissioning, particularly at Sellafield. Progress in
decommissioning most Magnox and research sites has nevertheless
been hampered by emerging pressures on the Authority’s financial
position, including the need to fulfil additional urgent
expenditure commitments – especially at Sellafield - and volatility
of income from its ageing and unreliable commercial facilities. The
‘start-stop’ nature of decommissioning at these sites means
projects can be halted at short notice. These changes have created
significant uncertainty for site licensees and their contractors,
and have resulted in additional costs for the taxpayer.
The Authority recognises that it must develop its approach to
contracting for decommissioning. The Authority’s use of cost
reimbursement contracts was appropriate in the early stages of
decommissioning. However, reimbursement contracts mean that any
additional costs incurred by sites are met by the taxpayer.
Among its recommendations, the NAO says that the Authority
should determine the reasons for the continuing increases in cost
estimates submitted by the sites, particularly on those elements of
work which, by now, should have been reliably costed. In the
absence of stable cost estimates, the Authority must consider how
it will compare the likely cost outcomes of bidders’ proposals in
the forthcoming competitions. It must also consider how, after
contracts have been let, it can subsequently lock the appointed
parent bodies into price and incentive regimes which provide the
taxpayer with good value.
Sir John Bourn, head of the National Audit Office, said
today:
“The Nuclear Decommissioning Authority took on the tough
job of decommissioning the UK’s legacy nuclear facilities. It has
put a lot of effort into determining the scale and nature of the
task ahead. Whilst the scale of the task is now better defined,
estimates of costs to the taxpayer have continued to rise. At the
same time, the start and stop nature of decommissioning work at
some sites lessens the value for money of the significant resources
invested to date.”
Notes for Editors:
- The Nuclear Decommissioning Authority was established in 2005
to ensure the safe and efficient clean-up of the UK’s first
generation of civil nuclear facilities, and to commercially operate
some of those facilities until the end of their working lives. It
is funded by a mixture of grant-in-aid and commercial income from
operating facilities. It is responsible for managing contracts with
site licensees who perform or commission work at sites, and for
running competitions to choose parent bodies which will own and
provide strategic management to these site licensees. In 2006-07,
the Authority spent around £2,200 million on work undertaken at its
sites, including £905 million on decommissioning, of which £686
million was spent on project work. Forty per cent of the
decommissioning project expenditure was undertaken at
Sellafield.
- The Authority’s largest site is the fuel processing facility at
Sellafield, inherited from British Nuclear Fuels Limited. Its sites
also include eleven Magnox power stations (two of which are still
operating), formerly owned by BNFL, and four research reactor sites
– including Dounreay – formerly owned by the United Kingdom Atomic
Energy Authority. Its portfolio is completed by the operational
fuel fabrication facility at Springfields, the fuel processing
facility at Capenhurst (no longer operating), and the Low Level
Waste Repository near Drigg.
- Estimates are of the undiscounted future costs of sites at 2007
prices. The estimates exclude commercial income from
operations.
- Prior to its establishment in 2005, the Authority’s sponsoring
Department – the Department for Business, Enterprise and Regulatory
Reform – decided that the Authority’s initial contracts with site
licensees should be cost reimbursable. The Department also designed
the approach the Authority is adopting in introducing competition
into the decommissioning market.
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 5/08
All enquiries to Donna Watson, NAO Press Office: Tel: 020 7798
7038
Mobile: 07917 555 388