Source · Select Committees · Public Accounts Committee
Recommendation 2
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 billion in 2004–05 to £23.5 billion in 2020–21 in real terms. There remain significant uncertainties that will need to be managed to prevent further increases in costs and ease pressures on the Fund. The cost of defueling will depend on the stations not closing significantly earlier than planned and how quickly they can be defueled once electricity generation ceases. EDFE’s latest decommissioning cost estimate excludes the early and unplanned closure of Dungeness B in June 2021, which could increase costs further by up to £1 billion. We have previously reported on the decommissioning of the Magnox stations, the first generation of nuclear stations, where uncertainty over the condition of the sites and how to approach 6 The future of the Advanced Gas-cooled Reactors the decommissioning task led to increases in estimated costs worth billions of pounds. However, we were informed that the Magnox stations have all now been defueled, furthermore Bradwell is the first Magnox station to enter the care and maintenance stage of the decommissioning process. The Department accepts that the circumstances of the AGR stations may change and therefore so would the estimates of the costs of decommissioning them. Recommendation: As part of the 2022 revaluation of the decommissioning liabilities, the Department, working with the trustees of the Fund, should ensure the estimates make explicit allowance for the risk of optimism bias. The Department should report back to the Committee on the new estimates when they are available.
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.
Government Response
Accepted
HM Government
Accepted
2023. This will reflect the revised costs for defueling/deconstruction and uncontracted liabilities. 2.3 As noted to the Committee, Électricité de France’s (EDF) strategies, plans and the estimated costs are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) under the terms of the revised funding agreement. EDF’s estimated costs of decommissioning is now to be presented as a range of costed scenarios reflecting risk and uncertainty and this is contractually updated on an annual basis. 2.4 EDF’s liabilities from 2020 onwards have utilised a new methodology based upon “top down” scenario evaluation specifically designed to improve understanding, make external scrutiny easier, and counter optimism bias. This has created a much wider range of costs (recognised in the liabilities numbers). HM Government’s Government Actuary Department (GAD) was involved in assessing this methodology.