Committee of Public Accounts: Press Notice


Publication of the Committee's 38th Report, Session 2007-08

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

"Decommissioning the UK's first generation of civil nuclear sites and running the remaining sites still operating will cost an enormous amount of money. The latest estimate, prepared last year, puts the cost at £73 billion over the coming decades.

"We cannot be confident, however, that even this figure will not be significantly upped when the estimates are next revised. Estimating costs far into the future is of course a precarious business; but elements of cost that might be expected to be more predictable - such as for work expected to be undertaken over the next five years - have risen steeply.

"An important lesson is that, when new nuclear facilities are built, plans for decommissioning them should be already in place. The Department is unable to provide complete assurance that the costs of decommissioning new nuclear power stations will not fall back on future taxpayers."

Mr Leigh was speaking as the Committee published its 38th Report of this Session which, on the basis of evidence from the Nuclear Decommissioning Authority (the Authority) and the Department for Business, Enterprise and Regulatory Reform, examined estimating the costs of decommissioning and delivering the decommissioning programme.

The Nuclear Decommissioning Authority was established in April 2005 under the Energy Act 2004 to take forward the decommissioning of UK's civil public sector nuclear sites. The Authority, a non-departmental public body, is sponsored by the Department for Business, Enterprise and Regulatory Reform (the Department), which approves its strategy and plans. Scottish Ministers approve its strategy and plans for Scottish sites. By December 2007, 14 of its 19 sites had already shut down and were being decommissioned and parts of Sellafield, the UK's largest site, were being cleaned-up.

The Authority discharges its responsibilities through contracts with licensed operators at each site. Site licensees manage sites, including preparing decommissioning plans and performing and sub-contracting work. In turn, licensees are owned by one of four parent bodies. The Authority is aiming to improve sites' performance by putting the right to be the parent body out to competition. The competition to be the parent body for Sellafield is due to be concluded by the end of 2008.

The Authority has established decommissioning plans for clearing individual sites but there is considerable uncertainty over the costs of decommissioning. The latest plans€”prepared in 2007€”estimate that it will cost £73 billion (£61 billion being the undiscounted cost of decommissioning civil nuclear sites and £12 billion the cost of running the Authority's four remaining operational facilities to the end of their commercial life). This is an increase of 30% since 2003, and there is a risk that costs may rise further. The Authority is dealing with a legacy of deferred decision making going back over 50 years of the UK's nuclear power programme. Some uncertainty in the cost estimates is, therefore, inevitable, but some of the escalating cost estimates should have been avoidable, including extra costs imposed by short-term changes to the decommissioning programme and the scale of site support costs.

The Authority's work has been hampered by uncertainty in the level of commercial income earned from ageing and unreliable facilities, and by emerging priorities at Sellafield. As a consequence, the Authority has had to cut, at short notice, the levels of funding it was planning to provide most of its decommissioning sites in 2007-08. This stop/start process in decommissioning has imposed additional costs on the taxpayer, with the Authority providing £31.6 million to cover the costs of early contract closure and staff training and redundancy. All these factors combine to disrupt the Authority's plans.

In January 2008, the Government announced it would allow energy companies the option of investing in new nuclear power stations. Operators will be expected to meet the full cost of decommissioning new facilities and their full share of waste management costs.