UK maintains decom funding despite budget cuts

15 November 2010

The UK nuclear industry was relieved to find that the Nuclear Decommissioning Authority (NDA) has been awarded an allocation of GBP8.62 over the next four years, a 30% increase in its income from the public purse, in the Comprehensive Spending Review (CSR) announced October 23rd. While Departments of Health, Education and International Development, were ring-fenced, expenditure by the Department of Energy and Climate Change (DECC), was not, and nuclear decommissioning – which consumes 40% of DECC’s budget - could have been subject to substantial cuts.

In the months between the May election and the CSR, the NDA and the nuclear industry had worked hard to convince the new government that cleaning up the nuclear legacy could not be put on the back burner. Clean up of high hazard legacy nuclear facilities largely escaped the hatchet because the coalition government recognises that failure to deal with nuclear hazards and waste could compromise public support for nuclear new build.

Energy Minister Charles Hendry told the autumn meeting of the Nuclear Development Forum that government commitment to nuclear clean up is part of the ‘social contract’ and is also a key enabler for new build. Government is keen to see new UK nuclear build to help meet its looming energy gap by providing a secure supply of low carbon electricity, but it says that private investment must meet the cost of the programme. However, it has pledged to clear the way for developers by removing potential barriers to investment, and establishing a regime for disposal of nuclear waste. Clean up of legacy sites and establishing a mechanism for dealing with higher activity radioactive waste can be seen in this context.

In discussions leading up to the CSR allocation, the NDA initially asked Treasury for GBP11.7bn to spend over the next four years, but subsequently revised this down to the GBP8.62bn which has been awarded.

The GBP8.62 award represents a 30% increase in its income from the public purse, up from the GBP6.4bn awarded for the last four years, but as the NDA’s income from Magnox stations’ electricity generation is diminishing, (while the operating lives of both Wylfa and Oldbury stations have been extended, both are due to cease generation by the end of 2012), it guarantees only a flat expenditure profile for decommissioning.

The revised spending plans include reducing the size of the NDA by around 30%, deferring some non-critical activity into future years; targeting sites to deliver tough efficiency targets, and setting ambitious targets for generating commercial income. NDA’s two new strap lines are : “Delivery through others” and, “Trust with consequences”. Site Licence Companies (SLCs) will be given more freedom to operate, and NDA looks to see more involvement of the Parent Body Organisations via increased ‘reachback’ for skills and expertise from the companies.

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