Energy Act
The Government legislated in the Energy Act 2008 to ensure that operators of new nuclear power stations will have secure financing arrangements in place to meet the full costs of decommissioning and their full share of waste management and disposal costs. Before construction begins, an operator of a new nuclear power station will have to submit a Funded Decommissioning Programme (FDP) for approval by the Secretary of State. The independent Nuclear Liabilities Financing Assurance Board was established to provide impartial scrutiny and advice on the suitability of FDPs.
The Energy Act is supported by the following secondary legislation:
These followed the March 2010 Consultation on the financing arrangements for nuclear decommissioning and waste handling regulations.
Guidance for prospective new nuclear operators
This guidance, published on 19 March 2012, explains how DECC will operate the recovery of costs from operators of new nuclear power stations. The Energy Act 2008 requires the operator to have in place a Funded Decommissioning Programme (FDP) approved by the Secretary of State at DECC before construction of the nuclear power station begins. The legislation allows the Secretary of State to require that the prospective operator pays a fee in relation to the cost of obtaining advice in relation to consideration of, or information required in relation to, the FDP.
Funded Decommissioning Programme Guidance
On 8 December 2011 the Government published Funded Decommissioning Programme Guidance for New Nuclear Power Stations. The Guidance sets out principles that the Secretary of State will expect to see satisfied in the FDP prepared by an operator. The Guidance gives information on ways in which an operator might satisfy those principles, thereby providing assistance to operators in understanding their obligations under the Energy Act.
This follows a consultation on draft FDP Guidance. The consultation closed on 8 March 2011 and the Government Response to the consultation was also published on 8 December 2011.
This consultation on revised FDP Guidance followed the publication in February 2008 of the Consultation on funded decommissioning programme guidance for new nuclear power stations.
Waste Transfer Pricing Methodology for the disposal of higher activity waste from new nuclear power stations
Alongside the approval of an operator’s FDP, the Government will expect to enter into a contract with the operator regarding the terms on which the Government will take title to and liability for the operator’s higher activity radioactive wastes. The Government expects to dispose of spent fuel and intermediate level waste from new nuclear power stations in the same Geological Disposal Facility that will be constructed for the disposal of legacy waste.
In particular this contract will need to set out how the price that will be charged for this waste transfer will be determined. The Waste Transfer Price will be set at a level consistent with the Government’s policy that operators of new nuclear power stations should meet their full share of waste management costs.
On 8 December 2011 the Government published the Waste Transfer Pricing Methodology for the disposal of higher activity waste from new nuclear power stations. This publication includes the Government response to the consultation on an updated Waste Transfer Pricing Methodology for the disposal of higher activity waste from new nuclear power stations.
This consultation followed a previous consultation in March 2010 on this subject and three discussion papers on a proposed fixed unit price methodology, published during autumn 2008 and spring 2009:
Spending Review 2010
The Spending Review of 20 October 2010 announced that direct government funding for nuclear decommissioning and other energy liabilities will rise to £2.5bn by 2014/15, from almost £2 in 2010/11, as commercial income from ageing power stations declines. This will enable the Nuclear Decommissioning Agency (NDA) to maintain progress on decommissioning.