APPENDIX 12
Memorandum by the Nuclear Industry Association
1. INTRODUCTION
The Nuclear Industry Association (NIA) is the
trade association and information and representative body for
the British civil nuclear industry. It represents over 100 companies
including the operators of the nuclear power stations, those engaged
in decommissioning, waste management, nuclear liabilities management
and all aspects of the nuclear fuel cycle, nuclear equipment suppliers,
engineering and construction firms, nuclear research organisations,
and legal, financial and consultancy companies.
The establishment of the Nuclear Decommissioning
Authority (NDA) heralds a fundamental change in the structure
of the British nuclear industry and the way in which it will operate
and, as such, it is of enormous interest to the NIA and its members.
NIA therefore welcomes the opportunity to submit its comments
on the to the Committee's inquiry into the NDA's progress.
The NIA has worked closely with the DTI, the
Liabilities Management Unit (LMU) within DTI that has paved the
way for the NDA, the emerging NDA team, and with our member companies
to represent the interests of our members as the proposals have
developed in the two and a half years since the White Paper, Managing
the Nuclear Legacy: a strategy for action, was published in
July 2002.
2. GENERAL COMMENTS
The NIA welcomes the establishment of the NDA
because it offers the prospect of a long-term, strategic and unified
approach to the management of Britain's historic nuclear legacy,
with transparency of plans, clear accountability and clarity on
funding. It also promises a systematic approach to hazard reduction,
and the prospect of a consistent methodology applied to the categorisation
of legacy wastes. It provides the foundation for British companies
to be internationally competitive in clean-up markets, and the
prospect of improved public confidence in the processes and the
industry's ability to deliver safe, economic and environmentally
responsible solutions.
3. FUNDING
The commercial opportunities offered by a programme
of work worth around £50 billion, with stated annual expenditure
of around £2 billion have attracted considerable interest
from existing UK nuclear companies, from nuclear companies overseas,
and from companies in other sectors. Robust assurances of the
Government's commitment to adequate and continued funding of the
NDA's activities are required to give the industry the incentive
to "tool up" for the work and to provide the public
with confidence that the work will be completed efficiently, safely
and to schedule.
In the NDA draft annual plan the budget for
2005-06 is approximately £2.2 billion, made up of grant from
Government of just over £500 million, transfer of funds from
BNFL of £675 million, and the remaining £1.084 billion
is funds from forecast income generated by the commercial operation
of sites. It is unclear how robust these funding arrangements
are given the heavy reliance on income from commercial activities
(over 60%) and the current State Aids investigation into the NDA.
There is no detail of the breakdown of income from commercial
activities on a site by site or contract basis and there are no
guarantees as to the robustness of this income stream, particularly
as there is no apparent duty on the NDA to raise or maximise income
from the operating plants that will fall under its jurisdiction.
While the State Aid investigation is underway the amount of money
available to the NDA is restricted to funds from the Nuclear Liabilities
Investment Portfolio and income from commercial operations only.
It is not clear how this will impact upon developing strategy
and any shortfall issues; for example, will funds from the NLIP
be used to make up a shortfall if income from commercial operations
is reduced for any reason?
4. SUPPLY CHAIN
The development and maintenance of a strong
indigenous supply chain capability is an important factor in ensuring
the long-term success of the NDA programmes. The UK nuclear industry
has already demonstrated a strong capability in the field of decommissioning
and cleanup in the UK and abroad.
The creation of the NDA has the potential to
impact radically on the supply chain, for example in terms of
its structure and form of contracts being passed down by tier
1 companies and this in turn has the potential to impact on the
NDA. The NDA Annual Plan does not adequately address how the UK
supply chain will be built into the competitive model the NDA
seeks to create. The plan would benefit from considering the tier
2/3 supply chain in more detail and recognise the fact that a
vital component of the UK decommissioning and clean up capability
is actually in the lower tier companies. The complete focus on
tier 1 incumbents in the plan could leave the NDA in danger of
overlooking the skills, competences and current competitiveness
of the supply chain and the way in which innovation may be encouraged.
In this regard, we warmly welcome the NDA's series of Supplier
Forums that began on 22 February.
5. SKILLS
NIA fully supports the NDA's intent of fulfilling
its statutory responsibilities for developing and maintaining
the skills base for decommissioning and clean up. However, reliance
upon Cogent and University alliances, while both are useful follow
up actions, together with the small amount of money (£100,000)
earmarked for this purpose in the Annual Plan, does not demonstrate
or give confidence that NDA is prepared to take a lead in this
area. A greater emphasis upon an NDA drive for nuclear skills
with a strong UK industry component is necessary if this vital
area is to be developed. The NDA should provide a clear direction
to ensure co-operation with the wider supply chain for skills
retention and development. This lead is necessary to ensure the
industry invests in medium and long term requirements and does
not just concentrate on short-term goals.
6. STRATEGY AND
PRIORITIES
The NDA's Annual Plan has been issued before
its Strategic Plan and the effect of this has to be recognised.
The Annual Plan has a site specific focus, and consequently there
is no discussion of the national strategy/context for the NDA's
work in its first 12 months in managing the nuclear clean-up and
various ongoing commercial opportunities. Customers and stakeholders
would wish to see more discussion of the ultimate objective, why
the cleanup is being done this way, how it all fits together,
what changes and impacts to the supply chain are anticipated,
what provision is being made for the long term management of liabilities
and waste, and so on. An explanation of the NDA's priorities would
be helpful, either at a high level, or through a more detailed
explanation of how such priorities relate to the activities that
have been planned for the various sites.
7. WASTE
Progress needs to be made towards an acceptable
long-term management solution for existing radioactive wastes
and future arisings both from the NDA's activities and from the
future operation of nuclear reactors and other facilities.
Given the crucially important role of the NDA
in the areas of nuclear decommissioning and waste, its institutional
relationships with major stakeholders, particularly those such
as the Regulators, Nirex and CoRWM whose work is intimately related
to the NDA's activities, require clarification.
NIA
25 February 2005
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