New UK watchdog for new build liabilities
31 March 2009
The UK government has announced the line-up of the board of a new body to oversee the financial arrangements for decommissioning and waste disposal from yet-to-be-built nuclear power stations.
The Nuclear Liabilities Financing Assurance Board (NLFAB) has been set up to provide assurance that appropriate financial arrangements are put in place by the operators of any new nuclear power stations built in England, Wales or Northern Ireland to meet the costs of decommissioning and waste management. The board, chaired by Lady Balfour of Burleigh, includes a lawyer, a fund manager, an environmentalist, an economist, an actuary and a nuclear engineer. All boast a wealth of experience within the relevant spheres.
Lady Balfour - the historian and writer Janet Morgan - said the board will provide independent scrutiny of financing arrangements that will last decades into the future. "The work of the NLFAB will require hard thinking and robust negotiation. This will help ensure that energy companies pay for the full costs of decommissioning and their full share of costs associated with nuclear waste management and disposal," she said.
Decommissioning funds for nuclear power plants are normally built up like a pension from very small fees paid on each unit of power generated. In Sweden the fee has been equivalent of 0.2 US cents per kWh, while in the USA the charge has been half of this. Nevertheless, America's Nuclear Waste Fund has built up to over $18 billion while the fund will continue to grow for several decades before having to meet certain of the costs. The UK energy white paper of 2008 estimated the cost of nuclear generation at 7.13 US cents per kWh, so the cost of waste management would be only a tiny increment on this - but it is up to the NLFAB to decide the appropriate level.
Announcing the board on behalf of the Department of Energy and Climate Change, energy and climate change minister Mike O'Brien described the NLFAB as "another piece of armour" to help ensure that the taxpayer would be protected from shouldering the clean-up liabilities from nuclear new build.
The UK government has put nuclear at the heart of its response to the need for secure, safe and affordable low-carbon energy supplies and is encouraging construction of the first new nuclear plants to be built in the country since Sizewell B started commercial operation in 1995. However, it has clearly stated that the sole responsibility for funding, developing and building the new plants, including decommissioning and waste management, must rest with the energy companies.