UK nuclear liability fund gets go-ahead
Author: Andrew Callus and Dominic Evans
The plan is designed to bundle together the future costs of decommissioning and cleaning up nuclear plants and to make sure the state meets those costs.
It came as a surprise to some commentators, who had expected the government to avoid the issue of nuclear industry reform in the wake of recent events.
In September, British Energy Plc , a nuclear power firm privatised in 1996, was forced to crawl back under the state umbrella for a government loan to stop it going bust.
The British Energy crisis prompted protests from groups opposed to nuclear power and a widespread debate over the future of economic and environmental policy in the energy sector.
"Draft legislation will be published on the management of nuclear liabilities," Britain's Queen Elizabeth told parliament in a speech setting out Prime Minister Tony Blair's legislative programme for the next 12 months.
The plan to set up the Liabilities Management Authority (LMA) was first proposed a year ago. It is designed to assume the decommissioning and other costs of state-owned British Nuclear Fuels Ltd (BNFL), and a smaller set of liabilities of the UK Atomic Energy Authority (UKAEA). Together these amount to about 48 billion pounds ($76.22 billion).
BNFL runs the UK's older and more costly Magnox nuclear power stations that were not privatised with British Energy, and the Sellafield nuclear reprocessing plant in northwest England.
UKAEA manages the decommissioning of reactors and other radioactive facilities. It is responsible for the Dounreay plant in Scotland, where 20 workers were exposed to radioactive particles this week.
Analysts and critics see the LMA scheme as likely to help BNFL with its plans to join the private sector, making the business more attractive to investors by keeping the liabilities with the taxpayer.
Some industry sources have suggested the LMA could end up as the vehicle for a rehabilitation of British Energy itself - taking on the privatised firm's liabilities as well and leaving a restructured company that has more investor appeal.
The draft bill, which may be held up by lengthy consultation before being taken forward for legislation, sets out goals to clean up the "nuclear legacy" safely and cost effectively, according to a Department of Trade and Industry document accompanying the Queen's speech.
Commercial contracts will remain with BNFL and will be unchanged by the proposals.
BNFL Chief Executive Norman Askew, who hopes to get the company privatised within the next three or four years, welcomed the plan, though he said he had initially hoped it might happen sooner.
"It's good news," he said. "Initially the intention was to get this in place by April 2004. That probably has slipped six months, but in the scheme of things that's not fatal."
Anti-nuclear group Greenpeace, which has been campaigning for British Energy to be put into administration, said the move raised the spectre of new nuclear plants being built.
"The new nuclear liability legislation will pass the industry's huge clean-up cost on to the taxpayer and so clear the way for dangerous new plants across the country," said a Greenpeace spokesman.
"People living near the sites earmarked for new nuclear stations should today be worried. All this when we have huge untapped reserves of renewable energy in this country."
(Additional reporting by F. Brinley Bruton).