Posted by: Dr. Breffni Lennon | February 4, 2013

Revealing the true cost of nuclear power in the UK

The Sellafield nuclear plant in Seascale, Cumbria. Photograph: Owen Humphreys/PA Wire

Photograph: Owen Humphreys/PA Wire via Irish Times

The House of Commons Public Accounts Committee has just published its report outlining the real cost of cleaning up nuclear waste at Sellafield, which now stands at £67.5 billion for the British taxpayer. The report reflects  current unhappiness on the part of MPs regarding the eye-watering (and not always transparent) cost nuclear power amounts to in the UK. It should make sobering reading for proponents of the technology, given Sellafield’s dismal legacy of mismanagement and poor planning. I have reproduced the report’s 6 recommendations below:

Conclusions and recommendations
1. The lifetime plan for Sellafield may be more credible than previous plans but it is
still not clear that it is sufficiently robust. The plan has not been sufficiently tested
against benchmarks and there are a number of uncertainties yet to be resolved, for
example regarding the character of the waste in the legacy ponds and silos, which
have a potentially significant impact on costs and schedules. Under current plans the
design and build of a geological disposal facility for long term storage of hazardous
waste is expected to take another 27 years to 2040. It seems implausible that this
critical project cannot be expedited. The Authority should develop and apply
benchmarks to assess the robustness of the lifetime plan and challenge existing
assumptions on costs and timescales for critical projects; and rigorously examine the
timetable for the geological disposal facility.

2. Basic project management failings continue to cause delays and cost increases to
critical risk reduction projects and programmes. The Authority has missed
regulatory targets but expects to start retrieving waste from the ‘legacy’ cooling
ponds and storage silos in 2015. To help ensure there is no further slippage to
timetables and costs are kept under control, the Authority should invite the Major
Projects Authority to review the most critical and largest projects, and should report
publicly on the progress of key risk reduction programmes against plans and
budgets.

3. Because of the uncertainty and delivery challenges at Sellafield, taxpayers
currently bear almost all of the financial risk of cost increases and delays. The use
of cost reimbursement contracts for Sellafield Limited and its subcontractors means
the financial risks are borne by the taxpayer. This contracting approach may be the
best option where costs are very uncertain. However, as project and programme
plans firm up and the lifetime plan becomes more robust, it should be possible to
move away from cost reimbursement contracts. The Authority should determine
how and when it will have achieved sufficient certainty to expect Sellafield Limited to
transfer risk down the supply chain on individual projects and then to reconsider its
contracting approach for the site as a whole.

4. The level of ‘savings’ achieved at Sellafield is central to the Authority’s decisions
on contract renewal and the performance fee paid out each year, but such savings
figures can be overstated. Nuclear Management Partners claim to have achieved
efficiency savings worth almost £700 million. The Authority is verifying these savings
but National Audit Office reports have shown that, across government, claimed
savings figures are often overstated. The National Audit Office should review the
basis on which savings have been assessed and provide assurance to the Committee
that the level of savings achieved at Sellafield has been measured and reported
accurately.

5. The Authority has not been able to demonstrate what value it is getting for the
payments made to Sellafield Limited. In 2011-12, the Authority paid out £54
million in fees, £17 million for ‘reachback’ staff and £11 million for executive staff
seconded from Nuclear Management Partners. Sellafield Limited also awarded 6
contracts to Nuclear Management Partners’ constituent companies worth some £54
million in 2011-12. That means, in effect, that those who let contracts awarded their
own constituent companies contracts, which raises concerns about fair competition
and value. The Authority should ensure all payments are linked to the value
delivered and that payments are not made where companies have failed to deliver. It
should also routinely provide assurance on the operation of its controls over
payments for Nuclear Management Partners’ constituent companies.

6. It is not clear what wider economic benefits have been achieved from the
enormous quantity of public money spent at Sellafield. The Department for
Business, Innovation and Skills, the Department of Energy and Climate Change, the
Authority and Sellafield Limited all provide support for the development of the
nuclear supply chain. In addition, the £1 billion spent annually by Sellafield Limited
on procurement ought to help create jobs, build skills and drive sustainable
economic growth in the region and the UK. The Authority and Sellafield Limited
should set out what added value can be achieved from taxpayers’ investment in
Sellafield, clarify their roles in delivering this and set performance targets for
contributing to the development of the regional and national economy and
workforce.

(House of Commons Committee of Public Accounts, 2013)

The report can be downloaded in full here.

An Irish Times article on the report can be accessed here, while a report from The Guardian newspaper can be accessed here.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: