European approval for UK waste disposal charges

Friday, 9 October 2015

The pricing methodology for waste transfer contracts between the UK government and operators of new nuclear power plants meets European state aid rules, the European Commission has concluded.

The methodology sets the price that operators of any new nuclear power plants built in the UK will have to pay for the final disposal of the intermediate- and high-level wastes generated from them in a planned national repository. The methodology aims to ensure that the cost of disposing of this waste is borne by the plant operators and not by the taxpayer. Plant operators will be expected to set aside sufficient funds to cover their future liabilities.

The methodology will establish a waste transfer price that reflects the actual disposal costs, the European Commission said. However, it noted this price will only be determined when most of the currently unknown costs factors of the repository have become clear. This is expected to be about 30 years after the start of operation of any new plant, it said. The price will cover all projected variable and fixed costs linked to the disposal of used fuel and intermediate-level waste, plus "an appropriate risk premium" to reflect possible cost increases after the setting of the price.

The UK government has also said it will set a price cap to provide some visibility of future liabilities to attract investors and secure financing.

The European Commission has now concluded the pricing methodology does not involve state aid according to EU rules. It also concluded that the actual disposal costs to be faced by operators are "very unlikely" to exceed the cap set by the government.

The UK plans to build a repository for the disposal of used fuel and intermediate-level waste from existing and future nuclear power plants. The facility - the site of which has yet to be selected - is expected to start operating around 2040. The disposal of intermediate-level waste in the facility is likely to begin around that time, while used fuel disposal is expected to take place between 2075 and 2140.

Europe's approval of the waste transfer contract means that, for the first time, the eventual decommissioning and waste management costs associated new nuclear power plants - such as EDF Energy's planned Hinkley Point C - will be paid by the generator at the time of generation. The cost of this Funded Decommissioning Program has already been taken into account in the strike price agreed by EDF Energy and the government for electricity generated by Hinkley Point C.

Nuclear Industry Association CEO Keith Parker welcomed the commission's decision on the waste transfer contract. He said, "The endorsement of the UK's responsible plans for ensuring the cost of dealing with and storing waste is paid for by the operator is another clear signal that nuclear power can play a key role in the UK's energy mix."

Researched and written
by World Nuclear News