This Observer article is based on documents grudgingly released to me at the 11th hour by the Energy Department after an FOI application went through three stages of appeal, having been rejected each time. What is really disturbing is that the Information Commissioner's Office inexplicably took the side of Government and a private foreign nuclear company (EDF) in backing secrecy.
Secret
government papers show taxpayers will pick up costs of Hinkley nuclear waste
storage
Documents show steps Whitehall took to reassure French
energy firm EDF and Chinese investors
Observer,
Sunday 30 October 2016
Taxpayers
will pick up the bill should the cost of storing radioactive waste produced by
Britain’s newest nuclear power station soar, according to confidential
documents which the government has battled to keep secret for more than a year.
The
papers confirm the steps the government took to reassure French energy firm EDF
and Chinese investors behind the £24bn Hinkley Point C plant that the amount they would
have to pay for the storage would be capped.
The
Department for Business, Energy & Industrial Strategy – in its previous
incarnation as the Department for Energy
and Climate Change – resisted repeated requests under the Freedom of
Information Act for the release of the documents which were submitted to the
European commission.
“The
government has attempted to keep the costs to the taxpayer of Hinkley under
wraps from the start,” said Dr Doug Parr, Greenpeace chief scientist. “It’s
hardly surprising as it doesn’t look good for the government’s claim that they
are trying to keep costs down for hardworking families.”
But,
earlier this month, on the very last day before government officials had to
submit their defence against an appeal for disclosure of the information, the
department released a “Nuclear Waste
Transfer Pricing Methodology Notification Paper”. Marked “commercial in
confidence”, it states that “unlimited exposure to risks relating to the costs
of disposing of their waste in a GDF [geological disposal facility], could not
be accepted by the operator as they would prevent the operator from securing
the finance necessary to undertake the project”.
Instead
the document explains that there will be a “cap on the liability of the
operator of the nuclear power station which would apply in a worst-case
scenario”. It adds: “The UK government accepts that, in setting a cap, the
residual risk, of the very worst-case scenarios where actual cost might exceed
the cap, is being borne by the government.”
Separate
documents confirm that the cap also applies should the cost of decommissioning
the reactor at the end of its life balloon.
Hinkley
Point C developers face £7.2bn cleanup bill at end of nuclear plant's life
French and Chinese developers will be the first nuclear
operators in the UK that will have to pay to decommission the site
Read more
The
level of the cap is unclear. But Dr David Lowry, a senior research fellow at
the Institute for Resource and Security Studies in Cambridge, Massachusetts,
who made the FoI request, said it was clear that the risk of footing the bill
for a significant cost overrun had been transferred from Hinkley’s operator to
the taxpayer.
“This
shows that the government cares more about the economic future of a foreign
power generator than British taxpayers,” Lowry said.
In
return for the cap, the document reveals that Hinkley’s operator will pay the
government a risk fee which “is expected to be relatively low, reflecting the
high level of confidence that the cap will not be breached”.
But
Lowry pointed out that the nuclear industry had form when it came to sizable
cost over-runs. He warned that an accident that could force the closure of the
reactor, either because of problems with it or at another plant, as happened in
Japan, would leave the taxpayer having to pay billions of pounds for the
clear-up years after it ceased generating revenues.
A government spokesman said: “All operators of new
nuclear power stations in the UK are legally obliged to meet the full costs of
decommissioning and their full share of waste management and disposal costs.
They will also pay the UK government to dispose of the waste produced at the
end of a plant’s life
Waste
costs for UK new build
09 December 2011
Disposing of waste from new UK
nuclear power plants will cost operators a maximum of 71p per MWh of power
produced, less than 1% of the cost of delivered electricity.
UK leaders have been clear for
several years that they wish to facilitate private companies in building new
nuclear power plants, but not to subsidise the technology. A key aspect of this
is fairness in paying for a single waste disposal facility to hold the new
privately produced radioactive waste as well as similar wastes from the former
national program and everything from research and weapons programs.
Yesterday, energy and climate
change minister Chris Huhne announced to parliament a framework for this,
including a charging mechanism meant to give cost certainty for new plant
builders and protect taxpayers at the same time. It came after a consultation
that ran from October 2010 to March this year.
The framework is complex, but at
its core is an estimate of the expected cost of the required geologic disposal
facility. At present this is highly speculative - without a site or design
firmly in mind - and so this will be revised every five years until the
facility comes into operation in 15-30 years.
From the start of generation,
operators of new nuclear power plants will be required to set aside enough
money to meet this expected cost. A cap has also been set, giving operators
certainty of the maximum that they would pay, and this is set at about three
times the current estimate.
However, the government is
responsibile for building the disposal site and wants to cover the risk it is
taking that costs could escalate further. For that reason it will add on
certain risk premiums set so that the UK taxpayer would not lose out unless the
cost of building the disposal facility grew by over five times the current
estimate.
What this boils down to is a
charge per unit of electricity generated. An operator can expect to pay £0.20
($0.31) per MWh if the facility is built to current cost estimates with a cap
of £0.71 ($1.11) per MWh. These compare to current prices of electricity for a
large industrial user of about £83 ($130) per MWh.
The UK government said its
objective "is to ensure the safe disposal of intermediate level
waste and spent fuel from new nuclear power stations without cost to the
taxpayer and to facilitate investment through providing cost certainty."
It added that it "is not seeking to make profits over and above a level
consistent with being compensated for the level of risk assumed, but does
expect operators to meet their full share of waste disposal costs."
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