Recommendations & Conclusions
7 items
1
Conclusion
Third Report - The future of the Advanc…
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business, Energy & Industrial Strategy (the Department), the Nuclear Decommissioning Authority (NDA) and EDF Energy (EDFE) on the decommissioning of the UK’s fleet of Advanced Gas-cooled Reactor (AGR) nuclear power stations.1
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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business, Energy & Industrial Strategy (the Department), the Nuclear Decommissioning Authority (NDA) and EDF Energy (EDFE) on the decommissioning of the UK’s fleet of Advanced Gas-cooled Reactor (AGR) nuclear power stations.1
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Government response AI summary
The response provides background information on the UK's nuclear power stations, the Nuclear Liabilities Fund, and the decommissioning process, but does not address any specific recommendation.
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HM Treasury
8
Conclusion
Third Report - The future of the Advanc…
Acknowledged
The Committee has previously identified significant uncertainty regarding the estimation of decommissioning costs. We examined, for example, the NDA’s management arrangements for decommissioning the Magnox nuclear power stations in 2020 and identified significant difficulties estimating decommissioning costs. We concluded that the NDA did not have a full understanding of the …
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The Committee has previously identified significant uncertainty regarding the estimation of decommissioning costs. We examined, for example, the NDA’s management arrangements for decommissioning the Magnox nuclear power stations in 2020 and identified significant difficulties estimating decommissioning costs. We concluded that the NDA did not have a full understanding of the sites meaning that there was significant uncertainty over how long decommissioning would take and how much it would cost.13
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Government response AI summary
The department agrees that there remains a significant risk that decommissioning costs will rise further and refers to their response to recommendation 2.
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HM Treasury
15
Conclusion
Third Report - The future of the Advanc…
Acknowledged
The assets of the Fund have been created from the contributions made by the station operators, income from investments, capital injections from government and the proceeds from the sale of the Fund’s shares in British Energy. Despite EDFE extending the operating lives of all the AGR stations, its financial contributions …
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The assets of the Fund have been created from the contributions made by the station operators, income from investments, capital injections from government and the proceeds from the sale of the Fund’s shares in British Energy. Despite EDFE extending the operating lives of all the AGR stations, its financial contributions to the Fund were agreed at the time of the sale of British Energy to EDFE in 2009. The deal the Department 18 C&AG’s Report, paras 2.5–2.7, 2.9–2.14 19 Q 40; C&AG’s report para 2.22 20 C&AG’s Report, para 2.23 21 Qq 74, 85 22 Qq 40, 61 23 Q 85; C&AG’s report para 4.11 24 Qq 31–33, C&AG’s Report para 3.6 The future of the Advanced Gas-cooled Reactors 13 negotiated did not include the option to increase or extend the contributions made by the operator. We asked the Department if there were any circumstances in which station operators could be expected to increase their contributions to the Fund. The Department told us that it was not aware of any circumstances where this would be the case for AGR stations. It explained that it could have structured the 2009 deal differently and could have asked EDFE to increase its contributions over time, but that would have increased uncertainty and risk for EDFE and might have affected the sale value. It noted that EDFE had paid £12.5 billion for the AGR stations, and it was logical to assume that it might have paid less under a different agreement.25 The NAO found that the main focus of the sale of British Energy had been on continuing operations, with less consideration given to decommissioning.26
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Government response AI summary
The department agrees that 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 and refers to their response to recommendation 3.
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HM Treasury
28
Conclusion
Third Report - The future of the Advanc…
Acknowledged
The AGR decommissioning programme is complex, and key organisations already have substantial portfolios of work. The NDA, for instance, already has a very heavy workload decommissioning the Magnox fleet and parts of the Sellafield site to which the AGRs will now be added. The NDA’s subsidiary, Magnox Ltd, is currently …
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The AGR decommissioning programme is complex, and key organisations already have substantial portfolios of work. The NDA, for instance, already has a very heavy workload decommissioning the Magnox fleet and parts of the Sellafield site to which the AGRs will now be added. The NDA’s subsidiary, Magnox Ltd, is currently responsible for 42 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy and Industrial Strategy and Sir Tom Scholar, Permanent Secretary, HM Treasury, re operation of Nuclear Liabilities Fund, dated 13 April 2022. 43 Qq 45, 65, 76–77; C&AG’s Report paras 13, 4.6–4.11 44 Q 45; C&AG’s Report case study 2, para 4.10 45 Qq 42, 45–47 The future of the Advanced Gas-cooled Reactors 17 decommissioning 12 nuclear power stations. The transfer of the AGR fleet will increase its portfolio to 19 stations.46 As part of our inquiry into the Magnox contract in 2020, we found that the NDA was already facing a considerable challenge in decommissioning the Magnox stations and that its poor performance had cost the taxpayer in excess of £140 million. We also found weak oversight of the NDA by the Department which had failed to detect the problems.47 Although we were informed that all the Magnox stations have now been defueled including Bradwell which has now entered the care and maintenance stage of the decommissioning process.
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Government response AI summary
The department agrees that 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 and refers to the response to recommendation 6.
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HM Treasury
29
Conclusion
Third Report - The future of the Advanc…
Acknowledged
The Department told us that following its experience of the Magnox contract, it had undertaken a full review to establish whether it had the right governance and it was now confident that this was the case. It also told us that the NDA has similarly taken “really important steps in …
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The Department told us that following its experience of the Magnox contract, it had undertaken a full review to establish whether it had the right governance and it was now confident that this was the case. It also told us that the NDA has similarly taken “really important steps in the way that it is run” including increasing its commercial capabilities and strengthening its board. It confirmed that it intended to keep governance arrangements under “continual renewal and focus” and that it would pay close attention to NDA’s development and performance but was “currently seeing a really reassuring trajectory”.48 The NDA confirmed that the new governance arrangements have been co- created between it and the Department and that it was confident that it had the team needed to take on the new work. It told us that it was “getting strong support from the Department and good challenge”.49
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Government response AI summary
The department agrees that its oversight of a complex set of governance arrangements is not subject to sufficient scrutiny and challenge and refers to the response to recommendation 7.
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HM Treasury
30
Conclusion
Third Report - The future of the Advanc…
Acknowledged
Decommissioning the AGR stations is an unusual programme compared with others in government as no single organisation has complete responsibility and authority for performance overall. The success of the programme will depend significantly on the ability of the Department, NDA and EDFE to work together effectively and resolve any problems …
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Decommissioning the AGR stations is an unusual programme compared with others in government as no single organisation has complete responsibility and authority for performance overall. The success of the programme will depend significantly on the ability of the Department, NDA and EDFE to work together effectively and resolve any problems or differences. The Department will be performing a number of roles: ensuring its decommissioning agreements with EDFE operate as intended; taking forward its normal sponsorship and oversight of the NDA; and at the same time supporting the potential development of new nuclear stations, such as at Sizewell C. The effectiveness of the Department in fulfilling these roles, while meeting its other obligations, will therefore have significant implications for the decommissioning programme as a whole.50
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Government response AI summary
The department agrees that its oversight of a complex set of governance arrangements is not subject to sufficient scrutiny and challenge and refers to the response to recommendation 7.
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HM Treasury
31
Recommendation
Third Report - The future of the Advanc…
Acknowledged
Given the centrality of its role we asked the Department whether its own role was subject to sufficient scrutiny and whether AGR decommissioning should be included in the Government Major Projects Portfolio. The Department told us that similar concerns had been raised by HM Treasury and Cabinet Office. However, the …
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Given the centrality of its role we asked the Department whether its own role was subject to sufficient scrutiny and whether AGR decommissioning should be included in the Government Major Projects Portfolio. The Department told us that similar concerns had been raised by HM Treasury and Cabinet Office. However, the Department said that it did not think that it was appropriate for the programme to be included in the GMPP while it was being delivered by EDFE but expected it to be put on the GMPP once more stations are transferred to NDA control. We have asked the Department to explain why the programme should not be added to the GMPP sooner and therefore benefit from advice on the adequacy of the proposed transfer. The Department said that in the meantime, and in response to HM Treasury and the Cabinet Office, it was developing metrics that would be akin to the GMPP to provide that assurance. However, the metrics have not yet been developed.51 46 Q 86; C&AG’s report para 12 47 Q 86; The Committee of Public Accounts, The Nuclear Decommissioning Authority’s management of the Magnox contract, Twenty-Eighth Session of 2019–21, HC 653, 27 November 2020 48 Q 86 49 Q 87 50 C&AG’s report paras 14, 2.26 51 Qq 88–89 18 The future of the Advanced Gas-cooled Reactors
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Government response AI summary
The government agrees and states that monitoring, reporting, and assurance processes were put into place and will revert with further details and how these processes provide appropriate oversight and facilitate the necessary scrutiny and challenge. The department will also approach the IPA for their support.
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HM Treasury