NDA’s big achievements

22 August 2008

The UK Nuclear Decommissioning Authority (NDA) has released its annual report, which hails its successes in introducing competition, generating efficiencies and establishing a baseline estimate for the costs of decommissioning the UK’s nuclear liabilities.

The NDA highlighted the March 2008 award of the contract for the Low Level Waste Repository to UK Nuclear Waste Management, and the July announcement of Nuclear Management Partners as preferred bidder for the parent body for Sellafield, as its major achievements in introducing competition to the decommissioning of the UK’s nuclear legacy sites. As for generating efficiency, the report trumpeted annual net efficiency savings in excess of its 2% annual target.

Baseline estimate

The baseline estimate for the cost of decommissioning and cleaning up the UK’s nuclear liabilities is now £44.1 billion ($83.7 billion), according to the NDA.

The NDA inherited a legacy of 19 sites – the majority of which are already shut down – spanning 60 years of nuclear research and development in the UK. Since its formation in 2005, the NDA said it has been working to establish an “underpinned baseline” for UK decommissioning and cleanup costs, and now that it has a national overview of the task it faces and the logical order in which hazard reduction and site cleanup activities should progress, the risk of incurring unnecessary expenditure is significantly reduced.

The NDA’s £44.1 billion estimate of the total discounted nuclear liabilities includes total decommissioning costs of £40.7 billion, plus a further £3.4 billion to build and operate a geological disposal facility. This equates to an undiscounted figure of £73.6 billion ($140 billion) over the 130-year decommissioning and cleanup programme: £63.5 billion for decommissioning and £10.1 billion for the NDA’s share of the construction and operation of the geologic disposal facility.

NDA chairman Stephen Henwood was keen to point out that the baseline estimate is for the cost of decommissioning legacy sites and is not necessarily applicable to nuclear new build. “Comparisons between the legacy, which has its roots in early scientific research and military uses, and the downstream costs associated with new build are hard to make,” he said. The agency also noted that there is a risk of further uncertainties and cost increases, given the complexity of some of the sites and facilities it must deal with.

Similar sentiments were expressed by Edward Leigh MP, chairman of the Committee of Public Accounts, the parliamentary committee tasked with overseeing government expenditure. Speaking as the committee published its own report on the NDA, Leigh noted that the NDA’s estimate could still be subject to significant increases in the future. “An important lesson is that, when new nuclear facilities are built, plans for decommissioning them should be already in place,” he said, adding that the Department of Business, Enterprise and Regulatory Reform, the government department that sponsors the NDA, could not guarantee that the costs of decommissioning new nuclear power stations would not fall back on future taxpayers.

The latest estimate for the cost of cleanup of nuclear liabilities is £7 billion up on the previous year’s figure. According to Henwood, about half of the increase is due to re-phasing plans to focus on higher hazards and updated assumptions about inflation rates in the construction sector. The rest is due in part to the knock-on effects of the Magnox Operating Review programme, with reduced reprocessing capacity at Sellafield meaning that Magnox reprocessing, originally scheduled for completion around the end of 2012, will take until January 2016 to complete. The resulting delay in defuelling and decommissioning Magnox plants will ultimately increase costs. Greater certainty around some waste treatment and land remediation costs have also contributed to the increase.

Sellafield management contract

The NDA’s report was preceded by the announcement of Nuclear Management Partners as the preferred bidder in the competition to win the competition to be parent body organisation (PBO) for the Sellafield site licence company (SLC). The SLC manages and operates the reprocessing and waste storage facilities at the Sellafield site plus the shutdown nuclear reactors at Windscale and Calder Hall, a former enrichment plant and facilities at Capenhurst and an engineering design centre at Risley.

Nuclear Management Partners, a joint venture of URS Washington Division, Amec and Areva, will now enter a period of contract negotiations with the NDA. A final contract is expected in October 2008. According to the NDA, the final contract will offer business worth an initial £1.3 billion ($2.5 billion) per year and an associated fee of about £50 million ($95 million) per year, dependent on performance improvements and efficiencies at the site.

The two-year selection process saw final tenders submitted by CH2MHill Nuclear Services, Fluor in partnership with Toshiba, and SBB Nuclear (Serco, Bechtel and Babcock & Wilcox), as well as Nuclear Management Partners. The NDA said the other bidders remain in reserve, pending the award of the final contract.

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