The Government are today entering into a new set of arrangements to deliver safe, lower-cost and more efficient decommissioning of the UK’s operating nuclear power stations, once they stop generating power.
Those nuclear power stations are all owned and operated by EDF, and the new arrangements have been negotiated by the Government to provide significant cost savings for the taxpayer, with the potential to achieve upward of £1 billion of savings without compromising on safety and security. They will also provide the Government with enhanced oversight of the decommissioning costs.
The new commercial arrangements relate to the fleet of seven advanced gas-cooled reactor (AGR) stations—Hunterston B, Hinkley Point B, Dungeness B, Hartlepool, Heysham 1, Heysham 2 and Torness. EDF last year announced the end of generation of Hunterston B and Hinkley Point B in 2022 and recently, Dungeness B with immediate effect. The other four are all scheduled to close on a rolling basis by 2030.
The new arrangements do not relate to the Sizewell B station, which is of a different technology—pressurised water reactor—and is due to continue operating until at least 2035. The new arrangements also do not cover the Hinkley Point C station, which is currently under construction.
Once a nuclear station closes the nuclear fuel from that station must first be removed (defueling) before it can be prepared for deconstruction. Then, following deconstruction, the site can be remediated.
The new arrangements we have negotiated will incentivise EDF to achieve the defueling of the AGR stations in a cost-effective and timely manner and include real risk share. EDF Energy have agreed to up to a total of £100 million in charges for underperformance in return for the potential to earn up to a total £100 million for good performance across the AGR fleet.
Shortly after EDF has completed the defueling activity, and subject to regulatory approval, the ownership of the AGR stations will transfer to the Nuclear Decommissioning Authority (NDA), on a station-by-station basis, to prepare for and manage the long-term decommissioning. The NDA will deliver this mission alongside their ongoing mission to decommission the first-generation Magnox nuclear power stations. This will allow the NDA to employ their unique expertise and experience of nuclear decommissioning and seek synergies with their wider mission to achieve savings for the taxpayer.
These new arrangements will harness the best of both organisations: EDF’s in defueling as an extension of its operational activity; NDA’s in decommissioning as the nation’s civil nuclear decommissioning authority—in order to deliver best value for the taxpayer, while maintaining strong regulatory oversight on safety, security, environmental and health matters.
The NDA and EDF will co-operate to help ensure a seamless transfer of the AGR sites and to enable efficiencies and identify and realise cost savings across the AGR decommissioning programme.
Under previous arrangements, EDF was responsible for the full defueling and deconstruction of the AGR stations, using funding provided by the Nuclear Liabilities Fund (NLF), a segregated fund managed by trustees and underwritten by Government. EDF’s AGR defueling and decommissioning work will continue to be funded by the NLF.
To facilitate these revised arrangements, designation directions have been laid in Westminster and jointly with Scottish Ministers in Holyrood—for Scottish stations —which provide the appropriate vires for the NDA to undertake their pre-transfer work and obligations on these stations.
I will deposit the designation directions in the Libraries of the House and further details are available at the www.gov.uk website.