Committee criticises NDA funding arrangements

07 April 2008

The funding model of the UK Nuclear Decommissioning Authority (NDA) is 'unsustainable', according to a report by the House of Commons Business and Enterprise Committee.

 

The committee of MPs expressed concern that the public funding of the NDA currently accounts for over 40% of the total budget of the Department of Business, Enterprise and Regulatory Reform (BERR). While funds had been assured for 2008-2011, the committee was concerned that future funding for the NDA was "too important to be left to the mercy of changing priorities in the Treasury and uncertain commercial income."

 

The committee agreed with Sir Brian Bender, permanent secretary to BERR, that a new system of funding was needed and work to set up such a system needed to begin urgently.

 

Funding for the NDA comes from a combination of government funds and from income from commercial operations, including reprocessing and sales of electricity from the Magnox stations that remain in operation at Wylfa and Oldbury. The NDA had also hoped to receive funds from waste substitution contracts that have been drawn up with reprocessing customers. Instead of returning to customers the larger quantities of low- and intermediate-level waste that arise from the reprocessing of their used nuclear fuel, smaller quantities of higher level waste substituted instead, leading to a cash saving.

 

According to the committee's report, there is confusion over whether the NDA can make immediate use of all funds arising from waste substitution contracts or whether those funds will have to be accounted for across the much longer lifetime of the existing reprocessing contracts. There previously had been an arrangement between the Treasury and the NDA to allow income from reprocessing to be considered on a cash basis, but this derogation had not covered waste substitution contracts. The committee was surprised the issue of accountancy arrangements for waste substitution contracts had not been resolved and believed the issue should have been dealt with earlier.

 

The committee stressed that their concerns over funding arrangements for the UK's existing decommissioning legacy should in no way have any consequences for the construction of new nuclear power stations in the UK, for which separate funding arrangements for decommissioning are being developed.

 

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