UK spending watchdog warns on costs of cleaning up old nuclear plants

Estimates of the cost to clear up 12 of the UK’s earliest nuclear power sites have increased by nearly £3bn since 2017 and there remains “inherent uncertainty” over the final bill, the country’s public spending watchdog has warned.

The National Audit Office on Friday published its latest report into the long-running saga around the decommissioning of two research sites and 10 early nuclear power stations in Britain, which came to be known as the “Magnox” plants due to the magnesium alloy that was used to cover the fuel rods inside their reactors.

The spending watchdog also found that the costs to the taxpayer of a botched 2014 tender process to outsource the decommissioning to the private sector was £20m higher than when it last investigated three years ago.

Cleaning up the Magnox sites, which were built before privatisation and include Hunterston A in Scotland and Hinkley Point A in Somerset, has turned into a costly and torturous affair.

In 2016 the High Court ruled the 2014 competition for a 14-year contract to decommission the sites — which had been awarded to Cavendish Fluor Partnership, or CFP, a joint venture between UK-based Babcock International and Fluor of the US — had been “fudged” by the Nuclear Decommissioning Authority, a body attached to the Department for Business, Energy and Industrial Strategy.

The Magnox contract does not include decommissioning the world’s first commercial nuclear power station, at Calder Hall in Cumbria, which is dealt with under a separate arrangement © UIG/Getty Images

A year later ministers, acting on legal advice, terminated the arrangement with CFP nine years early and renegotiated a shorter contract that ran until the end of August 2019. Decommissioning of the sites was then brought in-house by the NDA.

The NAO’s previous probe in 2017 into the decommissioning concluded that the failed Magnox contract had cost the taxpayer £122m in settlements with unsuccessful bidders, legal costs and staff time. In its latest report on Friday, the watchdog found the NDA had, in addition, agreed to pay up to £20m to exit the contract early, although it praised the authority for renegotiating the agreement under “the challenging circumstances”.

The watchdog also revealed that NDA estimates for the cost of getting all the Magnox plants “cleared and safely enclosed” had increased by up to £2.7bn to as much as £8.7bn since 2017. It added that costs are “likely to be subject to further change, largely because of the inherent uncertainties involved in cleaning up the UK’s nuclear sites”.

Once the reactors and waste stores are sealed, the sites are kept secure for a period potentially as long as 80 years for radiation levels to decay. In 2014, the same costs had been estimated at £3.8bn.

Decommissioning work is carried out at the Magnox nuclear power station at Hinkley Point in Somerset © Matt Cardy/Getty Images

Gareth Davies, the head of the NAO, said the NDA “needs to ensure it has a solid understanding of the condition of each Magnox site and the costs of cleaning them up”.

The NDA said it welcomed “the scrutiny the NAO places upon bodies like ours”, adding: “Ours is a hugely complex and challenging mission in which we’re making progress.”

The NAO report comes as several nuclear developers, including French utility EDF and Chinese state-backed CGN, are seeking to build new plants in Britain — an effort that is strongly contested by environment groups such as Greenpeace. Developers of new nuclear power plants are now required to pay towards the eventual decommissioning of their sites.

The Magnox contract did not include decommissioning the world’s first commercial nuclear power station, at Calder Hall on the Sellafield site in Cumbria, which is dealt with under a separate arrangement.

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