Energy companies cannot be charged a fully commercial price by the government for disposing of nuclear waste without “killing the prospect” of a new generation of reactors, a government adviser will warn on Thursday.
The analysis will fuel opposition to the government’s contentious and aggressive drive to expand the UK’s nuclear capacity. Gordon Brown will on Thursday underscore his determination to attract investors to build reactors, at his summit with Nicolas Sarkozy, the French president. The leaders are expected to agree to Anglo-French co-operation on nuclear skills and regulation.
The government has insisted that the utility companies now vying to build a fleet of nuclear power stations will bear their “full share” of decommissioning and waste disposal costs.
However, a costs analysis, published on Thursday, suggests that ministers cannot charge energy companies the rates already being paid by overseas utilities to have waste stored at Sellafield without jeopardising the entire new nuclear programme. Instead, the government would need to cap costs at about 6 to 12 per cent of this commercial value to make the new stations a viable investment.
The analysis has been undertaken by Ian Jackson, a former nuclear regulator who last year made a government-commissioned review of sites for new nuclear power stations. His cost comparisons take into account the proposed inclusion of new nuclear waste in the underground repository the UK intends to build.
Storing waste from new reactors, as well as existing waste, in the £10bn repository would add about £500m to the cost, Mr Jackson calculated. The fees being paid by overseas utilities to store intermediate level waste suggested the market value of the space was about £8.2bn, he said. But this would make the disposal cost prohibitively high. “The problem is that unfortunately the fully commercial price would make disposal far too expensive, killing the prospects of any new nuclear build programme in Britain,” said Mr Jackson.
Greenpeace, the environmental group, told the FT the analysis showed that the government had “cooked up a way to make nuclear liabilities artificially palatable. Ultimately, this means that the taxpayer is going to have to subsidise new nuclear power stations”.
But Tim Stone, a senior adviser to John Hutton, the business secretary, and the Treasury said last night the analysis was not comparing like with like and bore “no relation” to the costing work being undertaken by the government.
While the current waste exchange scheme generates significant profits, the focus for the new stations is to ensure that all costs are fully covered. The government remains adamant it is “very unlikely” the new stations will add to the estimated £73bn bill to the taxpayer for cleaning up the UK’s existing waste.
“There is clear industry confidence in the current process and the fact that the next generation of new nuclear will be economically attractive, as demonstrated by the interest in British Energy and the British Energy sites,” Mr Stone said.
Copyright The Financial Times Limited 2008