DECC acts again to lower new nuclear costs

The department is proposing to change rules on decommissioning programmes, which could raise concerns about robustness

Plans to change rules on funding nuclear decommissioning have been put out to consultation by the energy and climate department (DECC).

The consultation, which was issued in April, is aimed at further stimulating new nuclear.

It focuses on funded decommissioning programmes, under which operators of new nuclear plants must set aside funds to cover the full future costs of decommissioning plants and site clean-up. All such programmes must be approved by the secretary of state (ENDS Report, December 2010).

The consultation proposes three changes to current rules around them:

  • Changing the level of independent third-party verification. Currently, verifiers have to say that funded nuclear decommissioning programmes are providing “prudent” financial provision for decommissioning and clean-up.
    However, DECC now believes “verifiers are unlikely to want to commit themselves to judgements about prudence”. It intends to change the rules so that verifiers will simply have to say that the nuclear operator’s own assessment of prudence is “reasonable”.
  • Removing the need to gain approval from the secretary of state for modifications to programmes, as long as there is still adequate financial provision for decommissioning and clean-up.
  • Extending the period for submitting annual reports on programmes.

All the changes are designed to lessen costs for operators. But according to an impact assessment they will only save businesses £1.6m over the next 67 years.

The changes, particularly around verification, are likely to raise concerns over the robustness of decommissioning fund management. This is an issue that dogged earlier nuclear programmes.

The consultation runs until 8 June.

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