UK Inquiry Tracker

Future of the Advanced Gas-cooled Reactors

Public Accounts Committee Closed Inquiry

Opened: 12 Jan 2022 Closed: 2 Sep 2022 Parliament page

The UK’s nuclear power is generated primarily by seven advanced gas-cooled reactor (AGR) stations, owned by EDF Energy. The AGRs are scheduled to stop generating electricity during this decade, at which point fuel will be removed and transferred to Sellafield for safe storage. The AGRs will then be transferred to … Read more

10 Recommendations

21 Conclusions

1 Report

1 Oral session

1 Letter

1 Event

Activity timeline 5 events

2 Sep
2022

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Third report from Session 2022-23

20 May
2022

Report published

Third Report - The future of the Advanced Gas-cooled Reactors

28 Feb
2022

Correspondence

Correspondence from Sarah Munby Permanent Under-Secretary of State, Department for Business, Energy & Industrial Strategy, re PAC hearing o…

7 Feb
2022

Oral evidence

Future of the Advanced Gas-cooled Reactors

7 Feb
2022

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

Future of the Advanced Gas-cooled Reactors

Oral evidence sessions 1 session

7 Feb 2022

View on parliament.uk

Future of the Advanced Gas-cooled Reactors

David Peattie · Nuclear Decommissioning Authority Jerry Haller · EDF Energy Sarah Munby · Department for Business, Energy and Industrial Strategy Umran Nazir · Department for Business, Energy & Industrial Strategy

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Third Report - The future of the Advanced Gas-cooled Reactors	HC 118	20 May 2022	31	Responded

Recommendations & Conclusions

13 results

2 Recommendation Accepted

Third Report - The future of the A…

The estimated cost of decommissioning has nearly doubled since 2004–05 and there remains a significant...

The estimated cost of decommissioning has nearly doubled since 2004–05 and there remains a significant risk that the costs will rise further. The estimated cost of decommissioning the AGR stations, plus the PWR at Sizewell B, has increased from £12.6 … Read more

Government Response

The Department, working with the trustees of the Fund, should ensure the estimates make explicit allowance for the risk of optimism bias and report back to the Committee on the new estimates when they are available. They will reflect the revised costs for defueling/deconstruction and uncontracted liabilities.

HM Treasury

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3 Recommendation Accepted

Third Report - The future of the A…

The terms of the 2009 sale of the nuclear stations agreed by the Department with...

The terms of the 2009 sale of the nuclear stations agreed by the Department with EDFE placed a disproportionate amount of risk for meeting future decommissioning costs on the taxpayer. The negotiations surrounding the sale of the stations to EDFE … Read more The terms of the 2009 sale of the nuclear stations agreed by the Department with EDFE placed a disproportionate amount of risk for meeting future decommissioning costs on the taxpayer. The negotiations surrounding the sale of the stations to EDFE in 2009 were focused on maintaining operations, with less attention paid to meeting the costs of decommissioning. Although EDFE successfully extended the lives of all the AGR stations, which bolstered the UK’s capacity to generate electricity, there was no requirement to extend the contributions made by the operator to the Fund despite increasing decommissioning costs. The history of the AGR stations and the operation of the Fund provides important learning for government for planning and funding the decommissioning of new nuclear stations. For example, around the need for planning for decommissioning from the beginning of a new nuclear programme and having mechanisms in place to adjust operator contributions to any decommissioning fund in line with changes to the estimated costs of decommissioning. The Department expects the financial risk associated with decommissioning future nuclear power stations to be lower than that experienced with the Magnox and AGR programmes as the need for decommissioning will have been built into the design from the start. Recommendation: As proposals for building new nuclear stations are firmed up, the Department needs to learn lessons from AGR decommissioning for how the decommissioning of new nuclear stations will be funded, for example linking contributions more closely to reliable estimates of liabilities, and building in mechanisms for adjusting contributions from operators should estimates of liabilities increase. In addition, the Department should report to the Committee within three months about what decommissioning improvements have been built into Hinkley Point C and what proposals there are for the proposed new small modular reactors. Show less

Government Response

The department agrees to respond by August 2022, but states that FDP policies for new nuclear stations already build upon lessons learned from the AGR stations, highlighting the Energy Act 2008 requirements and periodic reviews of sufficiency.

HM Treasury

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5 Recommendation Accepted

Third Report - The future of the A…

We are not convinced the Department has struck the right balance in incentivising the NDA...

We are not convinced the Department has struck the right balance in incentivising the NDA and EDFE to deliver safe and efficient defueling of the AGR stations on time while reducing costs. The Department has introduced financial incentives to encourage … Read more

Government Response

The government agrees to write to the Committee by November 2022 outlining the governance and oversight for monitoring the impact of the incentive on delivery and how that indicates effectiveness of the mechanism.

HM Treasury

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6 Recommendation Accepted

Third Report - The future of the A…

Arrangements for transferring nuclear stations to NDA are worryingly under- developed, and there is a...

Arrangements for transferring nuclear stations to NDA are worryingly under- developed, and there is a risk that transfer negotiations between EDFE and NDA could drag on and increase the costs to the taxpayer. The first of the stations could transfer … Read more

Government Response

The government agrees to provide a detailed transfer plan for Hunterston B by May 2023 and will share it with the committee, along with a summary of progress for other stations.

HM Treasury

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10 Conclusion Accepted

Third Report - The future of the A…

There remain significant uncertainties which if managed poorly could increase decommissioning costs further.

There remain significant uncertainties which if managed poorly could increase decommissioning costs further. The estimated cost of defueling the seven stations, for example, ranges between £3.1 billion and £8 billion depending upon how quickly they can be defueled and how … Read more

Government Response

The government agrees with the recommendation to ensure estimates make explicit allowance for the risk of optimism bias as part of the 2022 revaluation. The department will respond by July 2023.

HM Treasury

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11 Recommendation Accepted

Third Report - The future of the A…

EDFE has recently brought forward the closure date for five out of the seven AGR...

EDFE has recently brought forward the closure date for five out of the seven AGR stations. EDFE told us it expects the stations to stop operating at their current closure dates but acknowledged that early closure was always a risk. … Read more

Government Response

The government agrees to ensure the 2022 revaluation of decommissioning liabilities makes explicit allowance for the risk of optimism bias and will report back to the Committee on the new estimates by July 2023.

HM Treasury

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12 Conclusion Accepted

Third Report - The future of the A…

In 2015, the then Shareholder Executive, on behalf of the Department undertook a review of...

In 2015, the then Shareholder Executive, on behalf of the Department undertook a review of the arrangements with EDFE for decommissioning the AGR stations. It concluded that the existing agreements did not incentivise EDFE to look at more innovative or … Read more

Government Response

The government agrees with the Committee’s recommendation and will respond to the Committee by November 2022, outlining the governance and oversight for monitoring the impact of the incentive on delivery and how that indicates effectiveness of the mechanism.

HM Treasury

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13 Conclusion Accepted

Third Report - The future of the A…

A review commissioned by the Department during the negotiations suggested that the £100 million potential...

A review commissioned by the Department during the negotiations suggested that the £100 million potential fee might not be enough incentive for EDFE to place greater focus on the AGR stations given the potential value of its other UK interests.20 … Read more

Government Response

HM Treasury

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14 Recommendation Accepted

Third Report - The future of the A…

The Department told us it did have other rights to direct EDFE, for example it...

The Department told us it did have other rights to direct EDFE, for example it has the power to change decommissioning plans. If the Department, for example, identified material cost saving opportunities of more than £5 million it told us … Read more

Government Response

The government refers to its response to recommendation 5, stating it needs to assure itself that the incentives are working and will act accordingly.

HM Treasury

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16 Conclusion Accepted

Third Report - The future of the A…

We asked why, given the amount of uncertainty surrounding the costs, and concerns about the...

We asked why, given the amount of uncertainty surrounding the costs, and concerns about the adequacy of the Fund to cover this, the risks of decommissioning were being entirely borne by the taxpayer. The Department said that the £100 million … Read more

Government Response

The government refers to its response to recommendation 3, stating that the terms of the 2009 sale placed a disproportionate amount of risk on the taxpayer.

HM Treasury

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17 Conclusion Accepted

Third Report - The future of the A…

The Department emphasised that it was applying significant learning from the experience of decommissioning the...

The Department emphasised that it was applying significant learning from the experience of decommissioning the Magnox and AGR stations. For new nuclear stations a funded decommissioning plan has to be in place before construction begins. The Department told us that … Read more

Government Response

The department agrees with the committee’s recommendation and will respond by August 2022 and states that the funded decommissioning plan (FDP) policies in place to support the development of new nuclear stations already build upon what was learnt from the AGR stations. It highlights aspects of the Energy Act 2008 and the requirements for operators of new nuclear power stations.

HM Treasury

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18 Conclusion Accepted

Third Report - The future of the A…

Nuclear power contributed around 16% of the UK’s electricity in 2020.

Nuclear power contributed around 16% of the UK’s electricity in 2020. As at January 2022, five of the seven AGR stations and the Pressurised Water Reactor at Sizewell B are the only nuclear power stations in the UK currently generating … Read more

Government Response

The government refers to its response to recommendation 3, stating that the FDP policies in place to support the development of new nuclear stations already build upon what was learnt from the AGR stations.

HM Treasury

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21 Recommendation Accepted

Third Report - The future of the A…

After the AGR stations are defueled EDFE will transfer the stations to NDA who will...

After the AGR stations are defueled EDFE will transfer the stations to NDA who will be responsible for completing the rest of the decommissioning process. The first 30 Qq 3, 7; C&AG’s Report para 1.2–1.3 31 Qq 3–5 32 Q … Read more

Government Response

The government agrees to complete a feasibility study within 12 months and report back to the Committee regarding the future use of nuclear land.

HM Treasury

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Government Response AI assessment · 31 of 10 classified

Accepted 13

Acknowledged 7

Deferred 5

Not Addressed 4

Rejected 2

Total 10 recs + 21 conclusions

Correspondence 1 letter

28 Feb 2022 Correspondence from Sarah Munby Permanent Under-Secretary of State, Department for Business, Energy & Industrial Strategy, re PAC hearing on “Future of the Advanced Gas-Cooled Reactors”, dated 21 February 2022

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