The main segment of decommissioning the United Kingdom’s Magnox reactors is estimated to cost as much as £8.7 billion, up from £3.8 billion six years ago, according to a report Friday from the government’s National Audit Office.
The auditor’s report covers the last two years of the Nuclear Decommissioning Authority’s (NDA) early wind-down of the contract with a private partnership to manage decommissioning operations. In September 2019, the NDA assumed full ownership of Magnox Ltd. from Cavendish Fluor Partnership.
“Our 2017 report found that the expected costs of decommissioning the Magnox sites increased from £3.8 billion in CFP’s winning bid in 2014 to £6.0 billion in early 2017,” according to the latest report from the National Audit Office. “The NDA revisited this analysis in August 2017 and estimated the cost at around £5.9 billion (nominal value, £5.6 billion in 2018-19 money terms). In July 2019, the NDA estimated that the whole programme would cost between £6.9 billion and £8.7 billion with a best estimate of £7.5 billion (in 2018-19 money terms) to get all the Magnox sites cleared and safely enclosed, ready for what it calls the ‘care and maintenance’ phase.”
The National Audit Office also looked at the steps the NDA has taken to address recommendations in a February 2018 report from the parliamentary Public Accounts Committee. That panel at the time called on the non-executive agency to better understand the status of the Magnox properties, improve monitoring of decommissioning, and strengthen its executive leadership.
The Nuclear Decommissioning Authority in September 2014 issued what was intended to be a 14-year contract to Cavendish Fluor Partnership to manage decommissioning of 10 Magnox nuclear power plants and two research facilities. The award in short order faced separate legal challenges from U.S.-based EnergySolutions and Bechtel, which had partnered to seek the contract. In addressing the EnergySolutions lawsuit, the U.K. High Court in 2016 determined that the NDA had “manipulated” the procurement proceeding to avoid dismissing Cavendish Fluor.
The agency in 2017 paid nearly £97.5 million to settle the lawsuits. It also said then it would cancel the Cavendish Fluor contract just over two years later, nearly a decade before its intended expiration.
The contract resulted in a £122 million expense to U.K. taxpayers, covering the lawsuit settlements and other costs, the National Audit Office said in 2017. “We also found that the NDA’s poor understanding of what was happening on the sites had contributed to serious problems after it awarded the contract to CFP in 2014, with its assumptions about the work required proving to be inaccurate,” this week’s report says.
However, the National Audit Office lauded NDA for its renegotiation of the contract to ensure Cavendish Fluor continued decommissioning while the government prepared to take over Magnox Ltd. The private firm carried out £2.72 billion worth of work over five years, completing 93% of what it had been expected to do in that half-decade. That included placing an initial reactor into “care and maintenance” – sealing the remaining infrastructure until radiation levels drop to sufficient levels to allow decommissioning to be completed.
Cavendish Fluor also received a £143 million contract fee from the Nuclear Decommissioning Authority.
Addressing criticism of its management of the Magnox contract has been an ongoing process, according to the National Audit Office. It found that the nuclear agency had bolstered its executive team with a new director for nuclear operations and a new commercial director. Its contract management team also grew from 18 staff in June 2018 to 18 staff and 16 consultants by the following January. Nonetheless, the NDA “still found it challenging to keep an up-to-date view of programme work plans and to promptly process the volume of requests from CFP to change the contracted plan,” this week’s report says.
Asbestos removal from the Magnox plants also remains a challenge, the National Audit Office said.
Among the report’s recommendations, the auditor urged the NDA to better understand the state of the Magnox properties and the decommissioning to be done, and to use that understanding to increase its confidence in decommissioning expenses.
In a statement Friday, the Nuclear Decommissioning Authority expressed its appreciation for the audit and recommendations. It highlighted the transition of ownership of Magnox Ltd., which is in line with NDA moves to take over the entities managing cleanup at other nuclear sites, including Sellafield.
“[W}e are seeing good progress being made to clean up our 12 Magnox sites under the leadership of the new CEO, Gwen Parry Jones OBE,” the Nuclear Decommissioning Authority said. “Ours is a hugely complex and challenging mission in which we’re making progress. The NAO recommendations will help to inform our work, as we continue vital clean-up and decommissioning work across our 17 nuclear sites.”
