Financing new build back end costs in the UK

25 September 2008

The UK government has published its response to the Consultation on Funded Decommissioning Programme Guidance for New Nuclear Power Stations. As stated in the January 2008 White Paper on Nuclear Power, nuclear operators – not taxpayers – will have to meet the full costs of decommissioning and their share of waste management costs.

Due to the number of stakeholder comments and requests for further information, revisions have been made to the timetable for the publication of waste management and disposal cost estimates. It now includes an extra stage – during the first half of 2009 – in which detailed proposals on the cost model and way in which a fixed unit price will be determined for the disposal of intermediate-level waste (ILW) and spent nuclear fuel (SNF) will be published, and put to consultation. Although this extra stage has been added, the earliest date an operator could request a fixed unit price for the disposal of ILW and SNF remains the same – mid to late 2009.

The government anticipates that funding will be based on unit volume of waste rather than, for example, setting a cost per kWh of electricity generated. This was the general the view of the respondents, a number of whom felt that waste minimisation should be incentivised.

It appears that the costs model will be based on a once through fuel cycle with the use of uranium or uranium oxide as fuel. Despite the fact several respondents stressed the need for flexibility in the future with regard to reprocessing and the use of mixed oxide (MOX) or other fuels in new nuclear power plants, the government seems to be committed to the position outlined in the white paper that there will be no reprocessing.

Respondents supported the idea of separate funds for decommissioning and for waste disposal costs. The main view was that funds should be independent of operators, however a minority felt that, given that operators would be required to top up any shortfall in the funds, they should be able to exert some influence over them.

The publication of the response to the consultation, on 18 September, came on the same day as the launch of the Office for Nuclear Development (OND). The new office, part of the Department for Business, Enterprise & Regulatory Reform, is designed to facilitate new nuclear investment in the UK and advise the secretary of state on the exercise of his regulatory and policy functions in relation to the nuclear industry.

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