10 Jun 2010

Giving nuclear industry a subsidy

I've just made yet another submission on nuclear power - this time to the consultation on a 'Methodology to Determine a Fixed Unit Price for Waste Disposal and Updated Cost Estimates for Nuclear Decommissioning, Waste Management and Waste Disposal' - catchy title - see details from DECC here. See also previous 'nuclear' blogs by clicking the 'nuclear' label below plus here the Green party's recent comprehensive report on Oldbury.

Photo: view of Oldbury nuke from top of Ash Lane, Randwick

Well what's the consultation about? Basically it is about giving the nuclear industry a subsidy! In my submission I've used work done by Greenpeace on this issue as they have also made a submission.

The last Government has launched a consultation on the issue of a Fixed Unit Price (FUP) to cover the disposal costs of nuclear wastes from new reactors. This FUP will, supposedly, cover the cost of disposing of intermediate level waste (ILW) and spent fuel from new nuclear stations. The FUP funds might also have to cover other costs e.g. replacement / refurbishment of any shared facilities for legacy and new build wastes. The proposals in the document will impact not only on nuclear waste and spent fuel disposal costs, but will also have ramifications for reactor sites.

As Greenpeace point out well respected nuclear economists have already cautioned the FUP effectively represents a subsidy to new build operators as it caps the cost to the operator of nuclear waste disposal and transfers the risk of cost overruns to the taxpayer.

The new Government has said it will not provide a subsidy to any new nuclear operators (see my blog here with comments added). This is our chance to get the FUP proposals abandoned.

The industry has lobbied to try to make it easier to get subsidies. Greenpeace point out that there are two significant changes in the consultation document from earlier proposals:

• Operators do not have to actually set a FUP before construction - this may be deferred for up to 10 years after reactors start operating. Instead they can opt for an 'expected' FUP (eFUP) - which means they pay less of a risk premium up front e.g. the eFUP would be agreed before reactor operations in 2018 but only finally set 10 years later in 2028.

• the Government will take 'title and liability' to the wastes and spent fuel at the end of reactor decommissioning, possibly before a disposal facility is available or, if one is available, before new build wastes can be disposed of.

Documents released through Freedom of Information requests reveal the changes have been lobbied for by the nuclear industry (see here link to Guardian). It is claimed that without the changes new build may not be economically viable. This needs to be challenged. Folk have until 18th June to submit their responses. My submission is below:

Re: Consultation on Methodology to Determine a Fixed Unit Price for Waste Disposal and Updated Cost Estimates for Nuclear Decommissioning, Waste Management and Waste Disposal.

Submitted as an individual by: Philip Booth

Question 1 Do you agree or disagree that prospective operators of new nuclear power stations should be given the option to defer the setting of their Fixed Unit Price? If so, do you agree that this deferral should be limited to 10 years after the nuclear power station has commenced operation? Do you have any comments on the way the Government proposes to determine an expected Fixed Unit Price as the basis for an operator’s interim provision in the event that they choose to defer the setting of their Fixed Unit Price?

The industry must be made to legally pay the full costs of waste disposal up to the time of disposal. The proposals for either an eFUP or FUP are mistaken. FUP is caps liabilities leaving the taxpayer at risk. The eFUP is also a nonsense as we cannot accurately estimate costs - previous attempts have shown how flawed this process is. It seems obvious that the way forward should be for nuclear operators to put waste funding before any dividends to investors otherwise we will have another British Energy situation. In other words sufficient money must be put away to deal with the wastes and spent fuel as and when they are created.

Question 2 Do you agree or disagree with the proposal that the Schedule for the Government to take title to and liability for an operator’s waste should be set in relation to the predicted end of the decommissioning of the nuclear power station? Do you have any comments on the way the Government proposes to recoup the additional costs it will incur in this case?

This proposal must be rejected strongly. It seems strange that this suggestion is even being put forward. Operators must remain financially and legally liable for their waste until it can be disposed of. Otherwise I can foresee a scenario where taxpayers end up being liable for hidden costs like extended storage. There is also no process for Parliamentary or public scrutiny to review any of potential cost increases. This is not open and transparent government. If FUP funding goes ahead then operators must be liable for anything outside that. Furthermore there are dangers of mixing old and new waste: costs of new waste can be transferred to management of the old waste.

Question 3 Do you agree or disagree that the proposed methodology to determine a Fixed Unit Price strikes the right balance in protecting the taxpayer, by taking a prudent and conservative approach to cost estimation, while facilitating new nuclear build by providing certainty to operators? What are your reasons?

It maybe me but there does not seem to be sufficient info to work out if the proposed methodology re FUP is right. There are so many uncertainties that do not seem to have been considered. As has been said by other commentators like Greenpeace this whole consultation seems to be about justifying new build over the interests of taxpayers. If operators can't accept the risks then we should be looking at lower risk, lower carbon alternatives.

Question 4 Do you agree or disagree with the proposed approach to determining an operator’s contribution to the fixed costs of constructing a Geological Disposal Facility? What are your reasons?

It is at least clear that there are many unanswered questions re the Geological Disposal Facility. How can we be sure geology is stable for so many thousands of years? How can we be sure a community is happy to take new build waste? Are we sure that new build waste will be accepted into the 'first' GDF? This has not yet been decided yet new build waste could add over 50% to the volume and some three-fold increase in radioactivity. The full cost of disposal of new build waste must be paid including factors like the construction of the facility and the estimated £1bn costs so far of the design of the GDF. These issues need resolving.

Question 5 Do you agree or disagree with the proposal that the units to be used for the Fixed Unit Price are pence per kWh for spent fuel and cubic metres of packaged volume for intermediate level waste? What are your reasons?

It is unclear in the consultation papers to me what happens if electricity prices go down and how operators will make up any shortfall in waste funds.

Question 6 Do the updated cost estimates represent a credible range of estimates of the likely costs for decommissioning, waste management and waste disposal for a new nuclear power station?

No. As noted there are too many unanswered questions and too many unknowns. One example is the huge impact that possible reprocessing of spent fuel from new build could have on any plans. This would have significant financial and environmental impacts.


Philip Booth said...

The real costs of nuclear power
The Guardian
Thursday 17 June 2010

Paul Spence says the nuclear industry expects to pay the full cost of
decommissioning a new generation of nuclear power stations (Response,
15 June). But his words about "our full share of waste management and
disposal costs" were carefully chosen. The consultation document
reveals that EDF considers their full share of these costs to be
around 20% of the total. As our report Nuclear Power? No Point!
highlighted last year, nuclear is only responsible for 4% of the
energy consumed in the UK. More energy can be saved by energy
conservation measures in homes and businesses. Focusing on the nuclear
industry takes resources away from building new renewable capacity,
which, given sufficient political will, could provide more than enough
electricity for the UK.

Darren Johnson
Green party spokesperson on Trade and Industry

Philip Booth said...

The French-state owned utility would be the major beneficiary of Government plans to artificially raise the price of carbon allowances traded in the UK. The move is intended to make it more expensive to run fossil-fuel power stations than low-carbon nuclear plants. This will substantially raise the price of electricity, according to two separate studies from KPMG and the Policy Exchange. A carbon price of €35 (£29) per tonne leading to an increase of £7 per megawatt hour would take the entire cost for the taxpayer to £2.5bn. EDF Energy will also be a major winner to the tune of approximately £350m because it already owns a fleet of existing nuclear power stations producing 13pc of Britain's electricity. The company will reap the benefit of the higher electricity price, but will not have to buy carbon allowances because nuclear plants do not emit greenhouse gases.

Telegraph 8th Aug 2010