The government’s energy minister, John Battle, has announced that, having resolved the nuclear liability issues, the merger of British Nuclear Fuels and Magnox Electric, which operates the country’s ageing fleet of Magnox reactors, will begin early in the year.

Full integration will take place in two phases. First, with the transfer of the government’s shareholding to BNFL, Magnox Electric will become a wholly owned subsidiary for business purposes within a new Magnox Generation Business Group. This Group will also include BNFL’s Calder Hall and Chapelcross stations as well as the existing Magnox Reprocessing Business Unit at Sellafield.

The second phase, full integration of the combined businesses, should be completed in a further 12 months. Before full integration can take place, however, BNFL will need to obtain new nuclear site licences, new radioactive discharge authorisation and a revised electricity generation licence to replace those held by Magnox Electric.

As the only company providing Magnox fuel services, the merger should ensure, as originally intended, more efficiency and further costs reductions. Battle said that he has also taken steps to ensure that the full costs of both companies’ nuclear liabilities will be met. In particular, the combined group are to establish an internal dedicated liabilities fund consisting of cash and realisable assets that will be able to meet all future liabilities “as they fall due.” This also means that the government is no longer committed to underwrite Magnox nuclear liabilities.