In November 2001, the UK government announced its intention to change the current arrangements for nuclear clean-up funded by the taxpayer. In July 2002, it produced a White Paper outlining its proposals.
The UK government has produced a White Paper entitled “Managing the Nuclear Legacy”, which outlines how the country’s proposed arrangements for nuclear waste clean up will operate in practice. It reflects the scale of the technical and managerial challenges involved, and the government’s intention to ensure, through competition, that the best skills and experience from both public and private sectors are made available.
The new arrangements will deal with the nuclear legacy from:
•Those nuclear sites and facilities now operated by the United Kingdom Atomic Energy Authority (UKAEA) and BNFL, which were developed from the 1950s onwards.
•The Magnox reactors, which were designed and built in the 1960s and 1970s, and now operated by BNFL, along with the plant and facilities at Sellafield used for reprocessing Magnox fuel and associated wastes.
This legacy is about 85 per cent of total UK nuclear liabilities, and is wholly the responsibility of the government. Six of the eleven Magnox stations are currently operational, but by 2010, all of these stations will have been closed. UKAEA’s last operational fission reactor closed in 1994. The Joint European Torus (JET) which supports fusion research at UKAEA’s Culham site remains operational, but will have to be decommissioned when it closes.
Cost effectiveness in the context of the White Paper is not so much about minimizing cost as ensuring that public money which has to be spent on cleaning up the legacy is used to best effect. Over £1 billion ($1.5 billion) a year over the next ten years, and some £48 billion in total, is expected to be required for clean-up operations.
Solving the challenges of legacy management requires:
•Scientific, technical and engineering skills of a high order
•Advances in basic science and technology
•Adoption of technologies proven in other areas
•Development of innovative solutions to complex engineering, organizational and logistical problems.
Figure 1. Public sector civil nuclear liabilities (undiscounted as at March 2002)
It also requires the broader strategic, project and operational management skills necessary to determine priorities and work out exactly what needs to be done and how best to tackle a job which, at some sites, will take over 100 years to complete.
A competitive approach
The government believes that UKAEA and BNFL have made steady progress in recent years in managing the legacy. However, it also believes that the scale and nature of this task require a much sharper and stronger strategic focus. It is therefore planning on creating a new Liabilities Management Authority (LMA) responsible to the government with a specific remit to ensure that the nuclear legacy is cleaned up safely, securely, cost effectively and in ways which protect the environment.
Because it will be responsible for the nuclear legacy as a whole, the LMA will be able to set the right framework for systematic and progressive delivery of the clean-up programme; promote and exploit synergies between different sites; encourage the development of best practice; and ensure that resources are deployed where they are most needed and can be used to best effect. It will also be in a position to take decisions that balance short, medium and long-term considerations and reflect the fact that the clean-up programme has to be sustained over a period of 100 years or more.
The government believes that competition will be central to the LMA’s approach. Developing competitive markets for clean-up contracts will help to stimulate innovation and improvements in safety and operating standards and enable the LMA to make the best possible use of the best available skills. While UKAEA and BNFL will be able to compete, the management of clean-up will be open to competition and there will be greater emphasis on competitive procurement of decommissioning and support services.
In the interim, the government will establish a new Liabilities Management Unit (LMU) in the Department of Trade and Industry (DTI). The LMU will work with BNFL, UKAEA, and the nuclear regulators in helping to prepare the ground for the LMA. Membership of the LMU is to be drawn from the public and private sectors.
For safety reasons, decommissioning can not take place immediately after plant shutdown. Current plans cover a range of decommissioning timescales depending on the type of plant or facility and the different types of radioactivity involved. In some cases, work may be spread over 100 years or more. In others, decommissioning can be carried out safely over much shorter periods.
The costs of decommissioning include: the processing, long-term management, storage, and final disposal of waste materials and spent fuel; and the environmental remediation of nuclear sites.
Figure 1 shows the estimated cost of dealing with the liabilities as of March 2002. Sellafield accounts for over 65 per cent of the total, and the 11 Magnox plants for nearly 25 per cent. Dounreay accounts for most of the rest. These figures are based on current knowledge and the successful application of current technology. In practice, however, there are uncertainties about what needs to be done in order to deal with particular plants or wastes, and advances in science and technological understanding may reduce costs. One of the LMA’s immediate priorities will be to review current estimates and the assumptions behind them and to reduce uncertainty. In the short-term, however, better definition of the problem will almost certainly mean that liabilities estimates will rise.
Figure 2. Timescales for discharging the liabilities based on current plans and decommissioning policies
Figure 2 shows the timescales for discharging the liabilities based on current plans and decommissioning policies. Areas in which expenditure will continue beyond the turn of the next century are reactor decommissioning and ILW and HLW storage and disposal.
The role of the LMA
The LMA’s main task will be to put an overall strategy in place for dealing with the legacy safely, securely, and in accordance with national and international environmental requirements. Its functions and duties will be set out in legislation.
In particular, this means:
•The LMA taking legal and financial responsibility for legacy sites and ensuring that the right arrangements are in place for driving forward the clean-up programme.
•Holding those responsible for site management to account for performance against objectives laid down by the LMA.
•Putting in place comprehensive long-term plans for the clean-up of all of its sites, and ensuring that short-term priorities for each site over a five to ten-year period are clearly identified.
•Ensuring that the skills and resources required for clean-up are available and can be sustained over the medium and long term.
•In conjunction with site licensees and the nuclear regulators, managing the competing demands of different sites so as to ensure that the skills and resources available are used to best effect, both at individual sites and across the legacy clean-up programme as a whole.
•Working with licensees and the regulators to exploit synergies between sites and applying relevant lessons learned at one site to others.
•Drawing on best practice from overseas and from other sectors to improve performance and delivery.
The LMA will keep management arrangements for its sites under review, making changes where there is scope for improving performance. The LMA will not directly manage the sites for which it is responsible. Instead, it will contract with site licensees who will be responsible for delivering, on an incentivized basis, the clean-up programme for each site consistent with the regulatory requirements which apply to the operation of a nuclear licensed site.
The separation of strategy and planning from implementation will enable the LMA to focus on its strategic role and to use the best of what the public and private sectors have to offer in driving clean-up forward.
Site licensees will:
•Be responsible for managing their sites in accordance with safety, security and environmental requirements.
•Work closely with the LMA and the nuclear regulators to develop and regularly update comprehensive long-term plans for clean-up.
•Prepare and implement short-term work programmes for delivering the priorities identified in those plans.
•Work with subcontractors to plan and carry out individual decommissioning and clean-up projects.
Be held to account by the LMA for performance against contract.
The development of competitive markets for clean-up contracts will be a key strategic objective for the LMA. Competition is one of the means by which it will secure the supply chain and long-term skills and knowledge base needed to deliver its programmes. It will also help to stimulate innovation and new ways of working. It could potentially benefit all aspects of site clean-up, improving safety and environmental performance as well as outcomes, reducing timescales as well as costs.
The LMA will actively seek to develop a competitive market for the management of nuclear licensed sites. Its contracts with site licensees will include commitments and measures to encourage sub-contracting of large discrete projects or packages of work consistent with regulatory requirements and best value for money. The general presumption will be that work will be subject to competitive tender.
Sub-contracting policy will also play a significant role in dealing with potential skills problems 10-15 years ahead. A policy which explicitly rewards contractors who commit to skill development targets may be one means by which the LMA could satisfy its own requirements and contribute more broadly to increasing the overall UK pool with science and engineering skills.
The LMA will be established by statute as a Non-Departmental Public Body (NDPB). This means that it will be an organization that is not directly part of government but is responsible to government.
The LMA will be a corporate body directed by a board. Its primary role will be to provide strategic leadership; challenge the management to deliver; and ensure that it is focused and incentivised to produce positive results.
The LMA’s ability to attract people with the quality of skills it requires will depend on external perceptions of the organization and its mission, the way in which staff are incentivised and managed, and its management’s ability to create a ‘can-do’ corporate culture focused on delivery of defined outcomes and doing things better. The challenge for management is to develop and foster this culture. Assuming a team of 200, initial estimates put the LMA’s operating costs at £25-30 million per annum.
The transfer of assets and liabilities to the LMA will trigger a fundamental restructuring of BNFL. The aim in restructuring is three-fold:
•To make the LMA responsible for all those activities and assets which are integral to, or may be required for, the on-going management of the liabilities it is taking on.
•To set the platform for competitive site management.
•To create the right framework for the future development of BNFL’s clean-up and other commercial businesses.
The key changes will involve:
•The LMA taking on legal responsibility for: the Sellafield site, all the assets and associated liabilities on the site, and assets necessary for its safe management and operation; the nuclear wastes and materials stored at Sellafield; the Magnox fleet; Capenhurst; the low level waste disposal site at Drigg; and any other assets and liabilities necessary for the future management of the nuclear legacy.
•The creation of a new company “New BNFL” which will include a utility product and services business and a government contracting business, supported by a research and development organisation.
•The existing BNFL company and its subsidiary Magnox Electric continuing as nuclear site licensees operating the sites for which they are currently responsible.
•The government acquiring the funds earmarked for legacy clean-up in BNFL’s Nuclear Liabilities Investment Portfolio.
BNFL will be owned by New BNFL, and operate under contract to the LMA until decisions have been taken on future arrangements for the management of Sellafield and the other sites concerned. Similarly, the LMA will place contracts for the management and operation of Magnox stations.
When the LMA is created, it will take on financial responsibility for UKAEA’s liabilities. Initially, however, the activities to discharge the liabilities will continue to be managed by UKAEA under the performance-based contracts similar to those that the LMA will have with BNFL.
The government does not consider that it would be appropriate for UKAEA as a public sector body to compete for additional site management contracts against firms from the private sector. Equally, it believes that UKAEA should remain in the public sector.
The government is considering two approaches to financing nuclear clean-up, the two options are:
•A segregated fund
•A statutory segregated account.
In either case, the fund would be set up in statute and could operate under the control of either the LMA or a separate body acting as trustee to the fund. They would have clear powers and duties relating to payment of money out of the fund, investment of assets and reporting of transactions. The fund could be managed either by private sector fund managers or by the National Debt Office in the Treasury.
The statute setting up the fund would define its scope and prevent money in it from being used for other purposes. In particular, the fund would cover the LMA’s clean-up programme and directly associated expenditure, for example research and skills programmes. It might also be used to cover the LMA’s own running costs.
When BNFL is restructured, the assets in the Nuclear Liabilities Investment Portfolio (NLIP) will be transferred to the government. These assets could be used to provide the initial endowment for the fund. Thereafter, it would be financed by a combination of:
•Annual payments by government voted by parliament, including payments currently made to UKAEA and BNFL and payments which would otherwise be made in future under the Magnox undertaking.
•Surpluses from the continued operation of commercial assets.
The annual payments into the fund by government, which would be approved by parliament through the normal supply process, would be set at levels which ensured that the fund was maintained within defined limits reflecting the LMA’s future spending projections. The operation of the commercial assets – THORP, SMP, and the operational Magnox stations – inherited from BNFL would be funded separately.