MPs fear taxpayer could end up paying nuclear clean-up bill

· No certainty over costs or safeguards, says watchdog · US group may win £1bn contract to clear Sellafield

Terry Macalister
The Guardian,
Thursday July 10, 2008

A parliamentary watchdog has accused the government of failing to provide sufficient safeguards to ensure that the clean-up costs of a planned new generation of atomic power stations do not end up in the lap of the taxpayer.
A damning report from the House of Commons committee of public accounts (CPA) also criticises ministers for providing no certainty over the future cost of decommissioning Britain's existing nuclear sites - estimated at £73bn.
"We cannot be confident ... that even this figure will not be significantly upped when the estimates are next revised," said Edward Leigh, chairman of the CPA. "Estimating costs far into the future is of course a precarious business; but elements of cost that might be expected to be more predictable - such as the work expected to be undertaken over three next five years - have risen steeply.
"The Department [of Business, Enterprise and Regulatory Reform] is unable to provide complete assurance that the costs of decommissioning new nuclear power stations will not fall back on future taxpayers."
The Department of Business last night rejected criticism about the rising clean-up bill and said it had always made clear that the taxpayer would not be burdened with the cost of new nuclear clean-up.
"This is the first government to have risen to the challenge of establishing the scale and cost of cleaning up the UK's nuclear legacy. The Nuclear Decommissioning Agency (NDA) is already succeeding in providing greater clarity, but we have always acknowledged that the cost estimate would increase in the short term as the NDA gained greater understanding of what it is dealing with," said a department spokesman.
"As for the building of new nuclear power stations, we've been clear from the very start that energy companies - not taxpayers - must meet the full costs of eventual decommissioning of new nuclear power stations and their full share of waste management and disposal costs. Government is putting in place, through the energy bill, one of the most robust regulatory frameworks in the world."
The two sides differ on the issue because the government committed itself in its consultation document only to ensure all new clean up is paid for "as far as possible". Independent experts have repeatedly warned there is a grey area which could leave the public purse exposed.
Robin Oakley, head of Greenpeace's climate and energy campaign, said the CPA report once again underlined the unpredictable and soaring costs associated with atomic power.
"More nuclear power stations will hit the taxpayer in the wallet. It's already costing the UK public billions to decommission and clean-up existing nuclear plants, and the misguided government push for more nuclear power stations will sting taxpayers for billions more.
"And, worryingly, this report points out that the NDA is years away from pinning down an estimate of how much it will cost to deal with the nuclear waste that we're already burdened with; it stands at £73bn, and it's highly likely that it will pass the £100bn mark."
The clean-up of the existing UK sites is in the hands of the government-established NDA whose budget is mainly provided by the Treasury but is meant to be topped up with income coming from customers using the Thorp and Mox reprocessing plants at Sellafield in Cumbria.
The CPA report - "Nuclear Decommissioning - taking forward decommissioning" says this decision left the NDA with a £31.6m bill to cover the costs of early contract closure, staff training and redundancies at the Magnox facilities.
DBERR, the Treasury and the NDA should all look at ways of ensuring this does not happen again by a range of methods including building financial reserves to provide a buffer against unexpected demands, says the House of Commons committee.
Meanwhile, the government will announce tomorrow which private sector company will win the contract to take over clean-up of Sellafield from the state-owned Sellafield Ltd, part of BNFL. There is speculation that the US group CH2M Hill is most likely to land the £1bn-a-year deal which will initially run for five years but could go on for up to 17 years.