The most politically important and influential committee of the British Parliament has bluntly told the UK Nuclear Decommissioning Authority (NDA) that “must learn from past mistakes and ensure that there is a comprehensive, robust business case before any decision is taken on dealing with the plutonium stockpile.”
In a highly critical report issued on 11 February on the management of Sellafield, (http://www.publications.parliament.uk/pa/cm201314/cmselect/cmpubacc/708/131104.htm), Progress at Sellafield, 43rd report of session 2013-14, the House of Commons Committee on Public Accounts (PAC) states that the NDA “has not set out clearly its strategy for dealing with the plutonium stored at Sellafield.” It recalls that The Department of Energy and Climate Change (DECC’s) preferred option is to process the plutonium to form a mixed oxide fuel for civilian use which would reduce the security concerns associated with its storage, but points out that a previous plant (Sellafiedl MOX plant, SM)P to manufacture plutonium into fuel for civilian purposes - which cost some £1 billion - proved to be “problematic” – critics rather say SMP was an abject technical and economic failure - and is now closed.
The PAC also reveal that DECC has admitted that “the value of the [MOX] fuel produced in a new project would be lower than the cost of building, maintaining and operating a new plant.” And it also opoints out anyway “there are currently no nuclear power stations in the UK which could use the fuel.”
Meanwhile, Liz Keenaghan-Clarke, DECC’s newly appointed deputy director for nuclear development and radioactive waste & decommissioning policy, told a meeting of DECC’s NGO forum for non-profit stakeholders on February 10th , that DECC has agreed within the coalition Government to move ahead with next stage of plutonium policy. But she revealed an important policy change: at the insistence of ministers it will include further assessment of immobilization options for the 111,000 kilogrammes of plutonium currently stockpiled at Sellafield, alongside re-use options set out in the NDA report (United Kingdom remains undecided on plutonium reuse options, IPFM, January 20, 2014; http://fissilematerials.org/blog/2014/01/united_kingdom_undecided_.html
Sellafield is the largest and most hazardous of the nuclear sites owned by the NDA in the UK. Sellafield Limited is the licensed operator of the site and manages the site under a contract with the NDA, which reimburses its costs of around £1.6 billion a year, the PAC sets out. In August 2008, the NDA appointed Nuclear Management Partnersd (NMP), a consortium of private sector companies comprising AMEC (UK) Areva France) and URS Washington (US), as the 'parent body organisation' (PBO) of Sellafield Limited, with aim of to improving performance using its expertise. For the past five years NMP has received fees earned by Sellafield Limited for improved performance in the form of dividends, receiving some £50 million in 2011-12, totalling £230 million over the 5 years of the initial contract. A report from consultants KMPG commissioned by the NDA in 2013 was very critical of key features of NMP's performance over the initial contract term, the PAC concludes.
Despite these criticisms, the NDA inexplicably announced in October 2013 that it had decided to extend its contract with NMP for a further five years.
The following exhange on plutonium occurred in the PAC hearing on November 4th last year, when the witnesses were: John Clarke, Chief Executive, NDA, Stephen Lovegrove, Permanent Secretary, DECC Mark Higson, then, Chief Executive, Office for Nuclear Development, DECC
We have never covered plutonium with you. Is the plutonium an asset or a liability?
Stephen Lovegrove: I will pass to Mark, if I may, but that is a difficult question to answer conclusively and in the long term, outside final decisions about what we are going to be able to do with the plutonium.
Mark Higson: Our currently preferred option for dealing with the plutonium is to build a MOX plant and use the fuel in new-build power stations in the United Kingdom. The value of the fuel will be less than the cost of building and running a plant on current assumptions. On that basis, it will be a liability.
Chair: Say that again?
Mark Higson: The value of the fuel, we would expect to be less than the cost of operating and building the MOX plant.
Q153 Chair: But you still want to build it?
Mark Higson: Because it is a route for disposing of plutonium and putting it beyond access.
Q154 Chair: My goodness. Just tell us so far, on the MOX plants you have had, how much that has cost us to date? What is the total cost of building and running them-without much success-and now closing and, presumably, having to dismantle them? How much have we spent so far?
Mark Higson: That is clearly a separate question from what we do with the plutonium that we already have.
Chair: I understand that.
Mark Higson: The answer is about £1 billion.
Chair: I think we have spent £1.4 billion so far.
John Clarke: Yes, we did, on a previous MOX plant that had significant problems with it.
Q155 Chair: Which we could not get to operate properly. How much are we spending a year just keeping the stuff safe?
John Clarke: I don’t have that information.
Q156 Chair: I have it down as £80 million. Is that massively out?
John Clarke: I would be happy to confirm that outside the Committee.
Q157 Chair: How much are we paying to look after other countries’ plutonium?
John Clarke: We are paid to look after other countries’ plutonium. The contracts are quite explicit that we are paid for the receipt of spent fuel, its processing, the storage of wastes-uranium and plutonium-and the eventual repatriation of it.
Q158 Chair: Okay. Sugar. We are considering building a new one, although the cost of building one would be more than the benefit of the fuel. Am I right in thinking that Sizewell is the only place that can currently use this MOX fuel?
Mark Higson: We expect MOX fuel to be utilised in new PWRs built on a new plant.
Chair: But it is not being utilised in the EDF one.
Mark Higson: Sorry?
Q159 Chair: You are expecting it to be utilised where?
Mark Higson: In power stations yet to be built. The EPR reactor at Hinkley, for example.
Chair: Oh my goodness. We have spent £1.4 billion so far. We don’t have the power stations that can utilise MOX, but we are still considering building one, although it will cost more than the fuel that we get from it in the power stations that are yet to be built.
Mark Higson: Clearly, it would be unwise to start building a new MOX plant unless we were reasonably satisfied that there was a market for the fuel produced.
Q160 Chair: When are you taking the decision, given that we are paying not just to look after our tonnage, but to look after Japanese and German tonnage?
John Clarke: We are paid to look after foreign material.
Chair: Still paid now?
John Clarke: Correct.
Q161 Chair: When are we taking the decision?
Mark Higson: There will need to be a pause for at least a couple of years. During that period, we will work with the NDA to assess alternative routes, including PRISM reactor and the possible use of CANDU reactors.
Q162 Chair: That is another one going up on your upward curve.
I am almost at an end, although I do not know if other Members want to ask anything else. The only other thing I wanted to ask about-this question is probably to you, Mr Clarke-was this unacceptable practice of NMP charging on this sample of expenses claims. Six hundred and six expenses claims were looked at, and they charged over a quarter of a million pounds that could not be justified, including-I cannot believe this-a £714 bill for a cab to take a cat. [Interruption.] "Where to?" I am being asked.
John Clarke: It was a range of people, including a cat. The point is that the NDA initiated an audit of expenses incurred by the Sellafield executive team, particularly those who were implanted by Nuclear Management Partners. We found that there was substantial and wholesale misallocation of expenses to a Sellafield Ltd account and to a Nuclear Management Partners account. I do not believe that there was anything other than a mistake in that. I do not think it was a deliberate intent. As soon as it was pointed out, the very morning that we discovered it, the managing director and the finance director of Sellafield Ltd were in my office in West Cumbria. They were clearly shocked by what we had found. They took very swift action; they reimbursed the money immediately and they switched their system to make sure that all management expenses are defaulted into an NMP account until such time as it is demonstrated that they are legitimate Sellafield Ltd claims, in which case they are put over. What we saw was that a range of expenses that should have been borne by NMP had inadvertently been-
Q163 Chair: The US Masters golf tournament being one, presumably.
John Clarke: It should have been borne by NMP and has been paid for by NMP. The system was clearly not operating with appropriate governance. It has been improved, and I believe everything has been put right.
Q164 Chair: Are you now keeping a better eye on it?
John Clarke: We will keep a better eye on it. We operate on an audit basis. We are a relatively small organisation of 200 or so people, and there are 17,000 people on the estate. We audit a range of activities, and it was as part of that audit that we found this situation. NMP and Sellafield Ltd rapidly put it right, and we will, of course, keep an eye on it going forward.
Q165 Chair: Okay. Last year when we saw you, we expressed concern about Sellafield Ltd awarding contracts worth £54 million to the constituent companies of NMP. Have you taken any action to control that?
John Clarke: We have behaved exactly as we said we did last year. The contract allows affiliate companies to bid for work at tier 2 at Sellafield. We make sure that all contracts that are let at Sellafield are reviewed at an appropriate level by ourselves, and we are content that contracts have been achieving-
Q166 Chair: So what proportion of contracts are now being executed by the three? NMP, through Sellafield, awards a contract to a constituent company of NMP, which I do not think is on. What is the proportion now? We were at £54 million last year, but what are we at now?
John Clarke: I do not have a number in terms of millions, but I believe that it is about 6% of the contract.
Q167 Chair: It was 6% last year. Has it gone up?
John Clarke: No, I believe it is still about 6%.
Q168 Chair: Can you send us a detailed note on that? I do have concerns, and I think people should choose.
John Clarke: Yes, we can.
Chair: I would also like a detailed note on the KPMG costs.
Q169 Stephen Barclay: On that, just to be clear, Mr Clarke, are you saying that you see no objection and, therefore, regardless of what the note says, nothing will change on that?
John Clarke: When we let the contract, we specifically did not preclude affiliate companies from bidding. Indeed, if you take Areva as an example, Areva have specific expertise that we would wish to be accessible at tier 2. If the very act of having them at tier 1 precludes us from having access to them at tier 2, we suffer from that. We want Areva, as an example-
Q170 Stephen Barclay: Just to be clear, when you renewed, you did not vary the contract to preclude that based on the discussion last year?
John Clarke: We did not.
Q171 Stephen Barclay: So, regardless of what the note says, in essence the practice will continue as per previous years, for the reasons you have set out?
John Clarke: Because we think that that gives us the best outcome. What we do do is make sure that all contracts are let following proper, appropriate and fair competition.
After the PAC report was published John Clarke stressed that the “NDA continues to focus on resolving the underlying issues at the site and has set out clear expectations of NMP for the second contract term. Safe stewardship of the Sellafield site, consistent levels of high operational performance and significant improvements in the delivery of major projects are the key priorities, with the NDA continuing to monitor progress closely and ensuring that fees are only paid on performance.”
But he made no mention of plutonium policy.
PAC Sellafield hearing: Oral and written evidence
Monday 4 November 2013: John Clarke, Chief Executive, Nuclear Decommissioning Authority, Stephen Lovegrove, Permanent Secretary and Mark Higson, Chief Executive, Office for Nuclear Development, Department of Energy and Climate Change
Wednesday 4 December 2013: Tom Zarges, Chairman, Nuclear Management Partners, Tony Price, Managing Director, Sellafield Ltd and John Clarke, Chief Executive, Nuclear Decommissioning Authority