Select Committee on Trade and Industry Written Evidence


APPENDIX 10

Sixth memorandum by British Energy

  I understand from the uncorrected transcript that Mr Buchanan and Mr Smith of Ofgem raised a number of questions about the potential for further life extension of the AGR fleet and its implications for deferral of the need for investment in UK electricity generation.

  British Energy believes that secure, low-carbon, output from life extensions of AGR and PWR stations could provide an important component in the UK electricity mix over the coming decades. We are working toward maximising the life of all our stations, and we hope that it will be possible to extend all station lives.

  However, in his evidence Mr Buchanan referred to international precedent, which is predominantly based on PWR and BWR technology. As we have made clear, the technology of the UK's AGR fleet is unique. To underpin any judgement on whether life extension of this fleet beyond the current scheduled closure dates is safe, technically feasible and economic, we must carry out a full review and evaluation of each station.

  The evaluations necessary to support life extension are very extensive, encompassing engineering evaluations, analyses and inspections of the entire station and support infrastructure, including the graphite core, boilers, pressure vessel stressing tendons, cooling water systems, etc. We cannot make judgements about further life extension until this work is done.

  When first commissioned, all AGRs had an accounting life of 25 years. As operating experience has built up, the life of each station has been extended. The extension we announced to the life of Dungeness B last September completed the programme of initial assessments for the AGR fleet. Any future extensions will therefore be incremental to lives that are already extended.

  Our evaluations are directed toward a goal of 10-year life extensions but it would be imprudent to assume success at this stage. Ten-year extensions may be possible for some stations, but we may find some station lives cannot be extended this long, and some may not be able to be extended at all. We do not know at this time of any issue that would suggest life extension is not possible—but neither do we yet know that any extensions are possible.

  That will be determined when the evaluations are completed three years before existing closure dates, in the course of which we are also required to consult the NDA on the benefit of life extension for a station. The next judgements on life extension will be by March 2008 when the necessary evaluations have been completed for Hunterston and Hinkley Point B.

  I attach material that we have used in Investor Presentations to describe the current position regarding station lifetimes, scheduled closure dates and the process we must follow in assessing any change.

  Mr Buchanan suggested in his evidence that Energy Policy needs to take account of different future scenarios. We agree. To deliver affordable, secure, low-carbon electricity for the UK, the policy framework needs to be robust to different scenarios for the future lives of coal and nuclear stations. Given the time it could take to deliver sufficient new clean coal or replacement nuclear capacity, we believe that the current review is timely.

  Please do not hesitate to let me know if you need any further information about our stations.

Robert Armour

Company Secretary and General Counsel

CURRENT POSITION ON STATION LIFETIMES
StationScheduled
Closure Date
Current
Lifetime
Life Extensons already declared PSR
(Date of
expected
response
from NII)
Dungeness B201835 years 10 yearsJan 2008
Hinkley Point B2011 35 years10 yearsJan 2007
Hunterston B201135 years 10 yearsJan 2007
Hartlepool201430 years 5 yearsJan 2009
Heysham 1201430 years 5 yearsJan 2009
Heysham 2202335 years 10 yearsJan 2010
Torness202335 years 10 yearsJan 2010
Sizewell B203540 years 0 yearsJan 2015

PSR  — Periodic Safety Review

NII  — Nuclear Installations Inspectorate

  —  Expect to review life extensions three years before planned closure

  —  Will review for up to 10 years for each station

DEFINING "LIFE EXTENSION"


PLANT LIFE EXTENSION


  Company decision on expectation of lifetime for public reporting and internal planning

—  Basis for NDA interface agreements, accounting

—  Require confidence (technical and commercial) in achieving

—  May need investment/resolution of issues

—  NDA approval required if decommissioning liabilities increased

Timetable

—  Defined by company

    —  Conclude at least three years before planned date for decommissioning

PERIODIC SAFETY REVIEW

  NII acceptance of systematic 10-yearly review of safety cases needed to continue operation (Licence Condition 15)

—  Based on IAEA safety guide

—  Draws on comprehensive assessment of operating history, safety against current standards, impact of ageing

—  Influences life extension view

Timetable

—  Formally defined with NII

    —  3 years ahead—company submits timetable

    —  1 year ahead—company submits PSR documents

    —  Time Zero—NII decision

    —  2 years beyond—complete outstanding requirements


SOME TECHNICAL ISSUES BEING EVALUATED IN LIFE EXTENSIONS

    —  AGRs

—  Graphite cores

—  Boilers (tubes, spines)

—  Gas circulator impellers

—  Seaward side of cooling water systems

—  Pressure vessel stressing tendons

—  Waste storage

    —  Sizewell

—  Reactor pressure vessel

—  Spent fuel storage

—  Steam generators/turbines


ANNOUNCEMENT OF LIFETIME EXTENSION OF DUNGENESS B RNS, 15 SEPTEMBER 2005

  The Company announces that it has completed the necessary technical and economic evaluation, as well as requisite external reviews, and has decided to extend Dungeness B's accounting life for 10 years to 2018. The decision extends the expected life of Dungeness B for accounting purposes to 35 years, in line with a number of the Company's other power stations.

  Bill Coley, Chief Executive Officer said. "This decision is based on a comprehensive technical and economic evaluation of Dungeness and is important in supporting the UK's security of electricity supply and climate change goals for the reduction of CO2 emissions."

  The decision with respect to Dungeness B is not indicative of the potential for life extensions at the Company's other nuclear power stations which are subject to separate technical and economic evaluation, currently expected to be completed a minimum of three years before the scheduled closure date of each respective station.

RECAP OF DUNGENESS B LIFETIME EXTENSION Q1 RESULTS, 28 SEPTEMBER 2005

  On 15 September 2005, the Group announced the completion of the necessary technical andeconomic evaluation regarding the potential accounting life extension at Dungeness B. This has resulted in the accounting life of Dungeness B being extended by ten years to 2018, five years beyond the accounting life extension assumed as part of the fair value exercise related to the restructuring on 14 January 2005.

COMPANY STATEMENTS ON LIFETIME EXTENSIONS (2)

RECAP OF DUNGENESS B LIFETIME EXTENSION Q2 RESULTS, 13 DECEMBER 2005

  On 15 September 2005, the Group announced its decision to extend the accounting life of Dungeness B by ten years to 2018. This is a result of a thorough technical and economic assessment of the station working in consultation with the Nuclear Decommissioning Authority and reflects our intention to seek life extensions for all our power stations where safe and profitable to do so. The life extension at Dungeness B will ensure continued contribution to reducing CO2 emissions in the UK.

LIFETIME EXTENSION POSITION 2005-06 FULL YEAR RESULTS, 20 JUNE 2006

  Last September, we extended the life of Dungeness for 10 years. Technical evaluations to support life extensions for Hinkley Point B and Hunterston B are underway. The Board will decide on life extension of these two stations by March 2008. We want to increase the prospects for life extension of all our stations and are factoring this into our investment planning. So as we seek to deliver shareholder value through improved reliability over the medium term, we are also seeking to enhance shareholder value through further life extensions.





 
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