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Nuclear Decommissioning makes every other disaster in the post-war period pale into insignificanc

nuClear News No.94 April 2017  The UK Government has been forced to pay nearly £100m in a settlement with two US companies – Energy Solutions and Bechtel – for mishandling the way it awarded a £6.1bn nuclear decommissioning contract. Ministers have ordered an inquiry headed by the former boss of National Grid to find out why the procurement process was so flawed. Labour said the payout showed “dramatic levels of incompetence”. The Nuclear Decommissioning Authority (NDA) will also terminate the contract it awarded for cleaning up the UK’s old Magnox reactor sites nine years early. The sites include Bradwell, Chapelcross, Hinkley A and Hunterston A. (1)

The High Court ruled last summer that the NDA had “manipulated” and “fudged” the tender process. It meant that the wrong company won the work to decommission 12 UK nuclear sites (10 Magnox sites plus Harwell and Winfrith). The move opens the door for other bidders to attempt to reclaim their bid costs, which could run to an additional £50m. The contract was awarded in 2014 to Cavendish Fluor Partnership, a joint venture between the UK’s Babcock International and Texas-based Fluor. However, the consortium cannot be asked to take on the extra work because that could increase potential compensation claims by companies that wrongly lost out in the tender. Some industry sources have complained that the government plumped for an unrealistically low bid for the work at the outset. Another losing bidder, UK Nuclear Restoration Ltd, which is a consortium of Amec Foster Wheeler, Atkins and Rolls-Royce, said that the settlement “raises serious concerns” about the procurement process and that it has raised the implications of the judgment with the government and the NDA. (2)

Former National Grid chief executive Steve Holliday has been appointed to lead an independent inquiry into what went wrong. The inquiry will look at how the mistakes were made and by who, how the litigation was handled, and the relationship between the NDA and the government departments. Holliday will publish an interim report in October. The government now has the daunting task of starting a new tendering process for the 12 sites, as the deal with Cavendish Fluor Partnership (CFP) will end early, in September 2019 instead of 2028. (3)

Babcock said in a statement the CFP, in which it has a 65% stake, has come to a mutual agreement with the NDA to bring to an end the contract at the end of August 2019, having operated the contract for a full five years. Babcock said it had become apparent that the work that needs to be done is now materially different in volume from that specified in the NDA’s tender, and this puts the contract at risk of a legal challenge. What those material differences are remains a mystery.

The Business Secretary, Greg Clark, said: “It has become clear to the NDA through this consolidation process that there is a significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done. The scale of the additional work is such that the NDA board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender.” (4)

The failure of the contract award process was “inevitable” according to nuclear power expert Dr Paul Dorfman, from University College London’s Energy Institute. “They were set up to fail and have failed because the understanding of costs and complexity to nuclear decommissioning is changing all the time,” he said. “Magnox reactors were thrown up in a rush to give electricity too cheap to meter and create plutonium and there was no thought of how they would be decommissioned. Each Magnox reactor is bespoke so decommissioning each one is different with its own complexities and challenges. The more we learn about dealing with the ‘back end’ of nuclear power, the more we see how complex and costly it is.” (5)

Stop Hinkley Spokesperson Roy Pumfrey said: “Why should anyone believe that this astonishing level of incompetence will suddenly end when we start to build new reactors? Just because Hinkley Point C is not a Magnox reactor doesn’t just suddenly make the industry competent.” (6)

The Daily Telegraph declared today “if we could, we would stop this madness … In committing to new nuclear, we seem to have joined a runaway train, with no hope of getting off. Has not the time finally arrived for a fully fledged rethink of the merits of Britain’s nuclear energy strategy?” (7)

Roy Pumfrey continued: “We agree – it is time to stop this madness. The UK’s nuclear decommissioning costs have increased from £55.8 billion in 2008 to £117.4 billion at the last count. Although EDF is required to set aside funds for decommissioning Hinkley Point C, this is only up to an agreed limit. The taxpayer will be on the hook for the all too predictable shortfall.”

Chris Huhne, former energy secretary for the coalition government, said the remit for the enquiry by Steve Holliday was not broad enough and it needed to look at the total cost of nuclear decommissioning. “It is a complete mess, it’s deeply embarrassing but it’s actually I’m afraid only the latest in a long line of embarrassments,” Huhne told BBC Radio 4. “We’re not even scraping the surface with the problem that this legal case has exposed.” Huhne, who was energy secretary between 2010 and 2012 and left the before the contract was awarded, said the cost of decommissioning the UK’s old nuclear fleet had increased £107bn in the last five years to £161bn. “In terms of industrial strategy this makes every other disaster in the post-war period pale into insignificance.” He said the problem stemmed from how early reactors stations were complex bespoke constructions made without consideration to how they would later be disassembled. “We ordered a whole series of Savile Row suits rather than a bunch of work-a-day Marks & Spencer suits… Every single one of those reactors is different. Even the fuel rods in every single one of those reactors are different – crazy.” (8) Huhne called on the government not to allow subsidies for new reactors. That was the coalition government policy. It should be the policy again but the government seems to be relenting – it’s opening the door to exactly a repetition of the sort of disaster that we see today. (9) http://www.no2nuclearpower.org.uk/nuclearnews/NuClearNewsNo94.pdf

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April 8, 2017 - Posted by | decommission reactor, politics, UK

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