Third Report - The future of the Advanced Gas-cooled Reactors
Select Committee
Public Accounts Committee
HC 118
20 May 2022
Recommendations
7 results
2
Accepted
The estimated cost of decommissioning has nearly doubled since 2004–05 and there remains a significant...
Recommendation
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 …
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Government Response Summary
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
Accepted
The terms of the 2009 sale of the nuclear stations agreed by the Department with...
Recommendation
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 …
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Government Response Summary
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
Accepted
We are not convinced the Department has struck the right balance in incentivising the NDA...
Recommendation
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 …
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Government Response Summary
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
Accepted
Arrangements for transferring nuclear stations to NDA are worryingly under- developed, and there is a...
Recommendation
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 …
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Government Response Summary
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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11
Accepted
EDFE has recently brought forward the closure date for five out of the seven AGR...
Recommendation
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. …
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Government Response Summary
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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14
Accepted
The Department told us it did have other rights to direct EDFE, for example it...
Recommendation
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 …
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Government Response Summary
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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21
Accepted
After the AGR stations are defueled EDFE will transfer the stations to NDA who will...
Recommendation
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 …
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Government Response Summary
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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Conclusions (6) Observations and findings — click to expand
10
Conclusion
Accepted
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 soon defueling starts once a station closes after stopping electricity …
Government Response Summary
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.
12
Conclusion
Accepted
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 cost- effective ways to minimise decommissioning costs. Between late 2017 …
Government Response Summary
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.
13
Conclusion
Accepted
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 We therefore queried whether the £100 million financial incentive was …
Government Response Summary
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.
16
Conclusion
Accepted
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 agreed with EDFE was a meaningful financial incentive to manage, …
Government Response Summary
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.
17
Conclusion
Accepted
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 it was “building from the start with decommissioning in mind” …
Government Response Summary
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.
18
Conclusion
Accepted
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 electricity; two of the AGRs, Dungeness B and Hunterston B, …
Government Response Summary
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.