Source · Select Committees · Public Accounts Committee
Recommendation 10
10
There remain significant uncertainties which if managed poorly could increase decommissioning costs further.
Conclusion
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 generation. We asked the Department how certain it was about the expected costs and if either the worst case or best case scenarios were more likely than the other. The Department told us that its current estimate range for defueling was “deliberately built to be a balanced assessment” and that while costs could change over time, it was “not skewed towards either one at this moment”. The NDA explained that it and EDFE were “absolutely dedicated” to minimising costs. It explained that it was working with EDFE to defuel the stations safely and as quickly as possible.15 It recognised, however, that delays in the process would increase costs. For example, the estimated annual cost of an AGR station once it has been defueled is between £25 million and £35 million compared with £140 million if the station still has fuel in it. The NDA explained that the defueling process could also be impacted by the timing of station closures, as closures earlier than planned would increase pressure on the defueling programme.16
Government Response
Not Addressed
HM Government
Not Addressed
2: PAC conclusion: The estimated cost of decommissioning has nearly doubled since 2004–05 and there remains a significant risk that the costs will rise further. 2: PAC 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. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2023 2.2 The department accepts the Committee’s recommendation and will respond by July 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.