Taxpayers will pick up the bill should the cost of storing radioactive waste produced by Britain’s newest nuclear power station soar, according to confidential documents which the government has battled to keep secret for more than a year.
The papers confirm the steps the government took to reassure French energy firm EDF and Chinese investors behind the £24bn Hinkley Point C plant that the amount they would have to pay for the storage would be capped.
The Department for Business, Energy & Industrial Strategy – in its previous incarnation as the Department for Energy and Climate Change – resisted repeated requests under the Freedom of Information Act for the release of the documents which were submitted to the European commission.
“The government has attempted to keep the costs to the taxpayer of Hinkley under wraps from the start,” said Dr Doug Parr, Greenpeace chief scientist. “It’s hardly surprising as it doesn’t look good for the government’s claim that they are trying to keep costs down for hardworking families.”
But, earlier this month, on the very last day before government officials had to submit their defence against an appeal for disclosure of the information, the department released a “Nuclear Waste Transfer Pricing Methodology Notification Paper”. Marked “commercial in confidence”, it states that “unlimited exposure to risks relating to the costs of disposing of their waste in a GDF [geological disposal facility], could not be accepted by the operator as they would prevent the operator from securing the finance necessary to undertake the project”.
Instead the document explains that there will be a “cap on the liability of the operator of the nuclear power station which would apply in a worst-case scenario”. It adds: “The UK government accepts that, in setting a cap, the residual risk, of the very worst-case scenarios where actual cost might exceed the cap, is being borne by the government.”
Separate documents confirm that the cap also applies should the cost of decommissioning the reactor at the end of its life balloon.
The level of the cap is unclear. But Dr David Lowry, a senior research fellow at the Institute for Resource and Security Studies in Cambridge, Massachusetts, who made the FoI request, said it was clear that the risk of footing the bill for a significant cost overrun had been transferred from Hinkley’s operator to the taxpayer.
“This shows that the government cares more about the economic future of a foreign power generator than British taxpayers,” Lowry said.
In return for the cap, the document reveals that Hinkley’s operator will pay the government a risk fee which “is expected to be relatively low, reflecting the high level of confidence that the cap will not be breached”.
But Lowry pointed out that the nuclear industry had form when it came to sizable cost over-runs. He warned that an accident that could force the closure of the reactor, either because of problems with it or at another plant, as happened in Japan, would leave the taxpayer having to pay billions of pounds for the clear-up years after it ceased generating revenues.
A government spokesman said: “All operators of new nuclear power stations in the UK are legally obliged to meet the full costs of decommissioning and their full share of waste management and disposal costs. They will also pay the UK government to dispose of the waste produced at the end of a plant’s life.”
