Nuclear costs to hit £90bn, warns Brown

Price of cleaning up UK's ageing reactors will be £20bn more than forecast, Chancellor tells cabinet Oliver Morgan, industrial editorSunday June 4, 2006The Observer
Chancellor Gordon Brown has told ministers that the cost of cleaning up Britain's nuclear facilities stands at £90bn, considerably higher than figures produced by the government agency overseeing the task.
The Chancellor's warning came at a cabinet meeting last month and is being seized on by ministers opposing plans to approve a new generation of atomic stations.
Energy minister Malcolm Wicks is due to hold one-to-one meetings with cabinet ministers in the coming weeks to brief them on the progress of the government's energy review and sound out their concerns. The review is intended to look at a range of technologies that can deliver 'carbon-free' and secure energy in the future, as the 20 per cent of generation capacity supplied by Britain's current nuclear facilities declines steeply.
The review does not report until later in the summer, but Tony Blair has indicated he believes nuclear should be part of the solution. Several cabinet ministers - thought to include Margaret Beckett, Peter Hain and Hilary Benn - have deep reservations about nuclear power. One said: 'Gordon Brown told the cabinet that the combined clean-up costs would be £90bn, not the £70bn that has been stated. That is a massive cost.'
The Treasury is known to have serious misgivings about a new nuclear building programme because the cost of constructing and decommissioning stations constantly rises. Independent experts say these concerns are justified, and that the £90bn figure is entirely plausible. One senior official said that the Nuclear Decommissioning Authority, which published the £70bn figure, had itself warned that the total could rise. On top of that, there is an additional £14bn needed to dismantle the eight second-generation stations owned by British Energy and the eventual costs of a deep underground store, estimated at between £15bn and £20bn.
'These numbers make a future programme look very unattractive,' said a minister.
Stations would be financed, built and operated by private consortia of energy companies, backed by banks. However, these companies will demand that the government addresses the risks they face: lengthy planning inquiries, the possibility that electricity price could slump, forcing nuclear operators into insolvency (as happened to British Energy), and escalating decommissioning costs.
The Nuclear Industry Association has demanded that the review deliver a streamlined planning system, a mechanism to support the price of nuclear power by forcing all suppliers to buy it at above a certain price, and a cap to decommissioning liabilities.
Opponents are determined to extract concessions if a pro-nuclear decision is taken. 'We will argue that if there is some kind of preferential treatment for nuclear, there must be a level playing field with other carbon-free technologies,' said one.The Observer Business Nuclear costs to hit £90bn, warns Brown