New nuclear operators will be required by law to put money aside from day one to pay for the eventual decommissioning costs and their full share of waste disposal. A consultation on draft Funded Decommissioning Programme Guidance sets out how operators will be required to meet their obligation to have robust decommissioning plans and secure funds in place before constructing a new power station.

The new law is expected to be published in early 2011. The original consultation process on this subject occurred in 2008, after which the UK government revised the guidance. But it has had discussions with UK new-build consortia NNB (EDRF), Horizon (RWE+E.ON) and NuGen (Iberdrola, Scottish&Southern and GDF Suez) and decided to re-launch the consultation in case there was interest from some stakeholders.

Also published is another rerun of a previous consultation, on waste transfer pricing methodology, from March 2010. The consultation sets out how a price will be determined for the disposal of new build higher activity waste in the planned Geological Disposal Facility (which currently excludes waste from proposed new reactors). There are two significant changes proposed to the methodology set out in the March consultation.

First, it proposes that the government should set a cap on the waste transfer price, to provide operators with cost certainty. The cap will be set at a very high level – the consultation suggests three times current cost estimates. However the Government accepts that it is impossible to be certain that costs will not exceed the cap so, in return for setting the cap, the waste transfer price charged to new nuclear operators will include an additional ‘risk fee’ to compensate the Government for accepting this small residual risk.

The second proposed change is that the Deferral Period should last for 30 years after start of generation. The Government’s view is that a 30-year Deferral Period should enable the Final Price to be set when the site for a GDF is known. This will allow a Site Specific Cost Estimate to be prepared, based on a good deal of actual cost data and with only a small amount of residual uncertainty. The current planning assumption is that GDF Site Selection will be in around 2025.