Companies to foot nuclear clean-up bill

Friday, February 22, 2008

Companies building nuclear reactors in the UK will have to meet the full cost of their future closure and clean-up, setting money aside from day one, the government will say on Friday.

Following on from last month’s white paper on nuclear power, the government will on Friday set out the draft framework for how the decommissioning of new nuclear reactors would be paid for.

Several companies, including British Energy, EDF, Eon, RWE and Centrica, are looking at building reactors but have said they want more certainty on a range of issues before they are ready to invest, including decommissioning costs and the disposal of radioactive waste.

John Hutton, business secretary, said that while the government wanted to encourage companies to build new reactors, taxpayers should be protected from bearing the cost of the eventual clean-up effort.

The bill for dealing with the waste from the UK’s existing nuclear programme has risen to £73bn ($143bn).

Mr Hutton said that the energy bill and Friday’s guidance made clear that “companies are liable by law to meet their full costs” regarding nuclear decommissioning. “Funds will be sufficient, secure and independent, it will be a criminal offence not to comply with the approved arrangements and we are taking powers to guard against unforeseen shortfalls,” he said.

Under the new guidance, companies must produce a detailed “funded decommissioning programme” before they get approval to build nuclear reactors.

This will include a commitment to pay into a secure and independently managed fund to cover all the costs of closing down the power stations and rehabilitating the sites, as well as the cost of disposing of the nuclear waste.

The government will appoint a number of experts from the nuclear, insurance and banking industries to sit on a Nuclear Liabilities Financing Assurance Board, which will monitor the companies’ decommissioning funds.

The NLFAB will also carry out an in-depth review of decommissioning costs, and whether the companies’ funds are sufficient, every five years.

Later this year the government is due to publish updated estimates for decommissioning and waste disposal costs for new nuclear reactors, which will form the base for the rates companies will have to pay the government to cover their waste disposal liabilities.

Copyright The Financial Times Limited 2008

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