Recommendation 5

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 cost-efficient defueling and station transfer with EDFE potentially earning or paying out £100 million depending on its performance. EDFE estimates the costs of defueling could be between £3.1 billion and £8.0 billion. The speed at which it can be undertaken safely will dictate the final costs. Successful defueling will depend on all parties being ready and working together, including the NDA being ready to receive and dismantle the volume of fuel arriving at Sellafield. Any delays in the defueling process could result in costs increasing substantially. Key to successful delivery is that stations close as planned, as premature closure of a station would mean that it would not be ready to start accelerated defueling. Making provision for a station to do so early could disrupt existing plans for decommissioning the rest of the AGR fleet. The early and unplanned closure of Dungeness B in 2021 has increased the estimated defueling costs by between £0.5 billion and £1.0 billion. There are significant risks to be managed and we are not convinced the Department’s financial incentive for EDFE to earn or lose up to £100 million, primarily directed at accelerated defueling, is sufficient to fully incentivise cost efficiency. The Department asserts that it has other measures it can use to direct EDFE but does not believe it will have to use them. Recommendation: The Department should write to the Committee within six months outlining how it will assure itself that the incentives are working and setting out the actions it will take if the incentives are not working.