The
Committee consisted of the following
Members:
Chair:
Katy
Clark
†
Coffey,
Dr Thérèse (Suffolk Coastal)
(Con)
†
Crockart,
Mike (Edinburgh West)
(LD)
Donaldson,
Mr Jeffrey M. (Lagan Valley)
(DUP)
†
Ellison,
Jane (Battersea)
(Con)
†
Eustice,
George (Camborne and Redruth)
(Con)
†
Freer,
Mike (Finchley and Golders Green)
(Con)
†
Hamilton,
Mr David (Midlothian)
(Lab)
†
Hendry,
Charles (Minister of State, Department of Energy and Climate
Change)
†
Irranca-Davies,
Huw (Ogmore)
(Lab)
McCabe,
Steve (Birmingham, Selly Oak)
(Lab)
†
McDonagh,
Siobhain (Mitcham and Morden)
(Lab)
Meacher,
Mr Michael (Oldham West and Royton)
(Lab)
†
Menzies,
Mark (Fylde) (Con)
†
Ruddock,
Joan (Lewisham, Deptford)
(Lab)
†
Sharma,
Mr Virendra (Ealing, Southall)
(Lab)
†
Vara,
Mr Shailesh (North West Cambridgeshire)
(Con)
†
Whittaker,
Craig (Calder Valley)
(Con)
†
Williams,
Roger (Brecon and Radnorshire)
(LD)
Mark Etherton, Committee
Clerk
† attended the
Committee
First
Delegated Legislation
Committee
Monday
22 November
2010
[Katy
Clark
in the
Chair]
Draft
Nuclear Decommissioning and Waste Handling (Designated Technical
Matters) Order
2010
4.30
pm
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
I beg to
move,
That
the Committee has considered the draft Nuclear Decommissioning and
Waste Handling (Designated Technical Matters) Order
2010.
It
is a great pleasure to serve under your chairmanship this afternoon, Ms
Clark, to discuss the instrument, which my right hon. Friend the
Secretary of State for Energy and Climate Change laid before the House
on 18 October. The order specifies which technical matters, in addition
to those already under the Energy Act 2008, are to be designated
technical matters. Its purpose is to support the requirement under the
Energy Act for nuclear operators to make financial provision in their
funded decommissioning programmes for those designated technical
matters. The Energy Act 2008 contains only one category of designated
technical matters, namely the decommissioning of a nuclear power
station and cleaning up the site. It provides that the Secretary of
State specifies by order the other matters that are to be designated
technical matters. The order is therefore necessary to give operators
clarity about what designated technical matters they must provide
for.
The
order specifies that the construction and maintenance of interim stores
used for storage and any activity preparatory to the decommissioning of
a relevant nuclear installation and cleaning up of a site, are
designated technical matters. It means that the costs also have to be
funded through funds set aside as part of the funded decommissioning
programme. It might be claimed that the operator could pay for those
costs out of operational expenditure and that designation is
unnecessary. However, that might put the costs in competition with
other demands on revenue and, if the operator were unable to meet the
costs when they fall due, there would be a risk that they could fall to
the taxpayer. It was therefore appropriate to designate the costs in
order to limit the risk to the taxpayer by ensuring that funds are set
aside to carry out the relevant
work.
The
order will be complemented by the Nuclear Decommissioning and Waste
Handling (Finance and Fees) Regulations, which will be laid before
Parliament when the order completes its passage. Following consultation
on the provision of the draft order earlier this year and responses
received, the Government do not propose to extend the definition of
designated technical matters beyond interim stores and activities
preparatory to the decommissioning and cleaning up of a site. The order
will benefit both industry and the public. It clarifies the obligations
of the nuclear industry
and therefore reduces uncertainty and helps investment. The order,
together with the Act, also ensures that the cost of waste management,
disposal and decommissioning does not fall on the taxpayer. I commend
the order to the
Committee.
4.33
pm
Huw
Irranca-Davies (Ogmore) (Lab):
It is good to serve under
your stewardship this afternoon, Ms Clark. I anticipate that our
sitting will not be too long. In fact, perhaps the Minister will say
whether we could have debated the order with the two justification
orders that we dealt with recently, as the other place did, because the
subjects go together well. However, we can consider that in
future.
The order is
welcome. As the Minister said, it focuses on technical rather than
financial matters. I look forward to our forthcoming debate on the
financing of nuclear decommissioning and waste handling, which, of
course, is dependent on the order being accepted today. Today’s
order deals purely with technical matters. I shall not reprise what the
Minister said about the purpose behind the motion, but for the benefit
of those who are listening to our debate or who will read a report of
our proceedings in Hansard subsequently, I note that the order,
the regulations pertinent to it and supporting documents were cleared
by the Economic Affairs Committee and were subject to pre-legislative
scrutiny by the Joint Committee on Statutory Instruments. They have
been subject to close
examination.
I
will pick up two or three issues that will be very straightforward to
clarify. First, in the debate in the other place on 17 November,
Official Report, column 832, Lord Marland responded
to a question from my colleague Baroness Smith of Basildon on the
funding implications for and financial burden on the
operators:
“Clearly,
we have not got to where we are now without consultation with all the
operators.”
I
know that there has been good
consultation.
“They
understand the rules of engagement—I am not going to say they
are happy with them, as I cannot immediately tell you
that”.—[Official Report, House of Lords, 17
November 2010; Vol. 722, c.
832.]
Given the
overall burden that will fall on the various operators, and following
the detailed consultation with them and the industry, what is the
Minister’s understanding of the operators’ level of
contentment with the order and with subsequent orders relating to costs
that will fall on them? Do they feel that the order will be
commensurate and appropriate, or do they feel overburdened? It is right
that the costs of decommissioning and waste should fall on the
operators. One revision to the order that the Minister has wisely
brought in is lifting the cap on the burden falling on them. Will he
tell us what recent discussions he has had with them? Are the operators
now content with the order and can they have confidence both to invest
in the future and to deal with the financial burdens of the waste
clear-up?
Secondly,
it would be good if the Minister enlightened the Committee on the
independent third-party verifier. Who are they likely to be and what
are the likely costs? I assume that the costs will again fall on the
operators. Will he clarify that, as more detail will be helpful? The
materiality threshold is designed to reduce the administrative burden
on the operators and to ensure that changes to
the funded decommissioning programme are approved by the Secretary of
State. How will that work, and is it set at the appropriate level? Have
his discussions with the operators given him the assurance that they
are confident that the materiality threshold has been adequately dealt
with?
Additionally,
there is a function for reports to be made annually and quinquennially.
I seek an assurance that the Minister is happy with that reporting
function. What details will the report include and what thought has he
given to its content? Is the reporting function appropriate in terms of
transparency and the burden on the operators? Although the discussion
on the two justification orders the other day went into some detail, in
this case I am pleased to say that I welcome the order and look forward
to the Minister’s response to my points. The order is another
stage in the process of our moving towards having nuclear new build in
place in timely
fashion.
4.38
pm
Charles
Hendry:
We have had a useful exchange about some of the
issues involved in the order. I am glad that both sides can agree about
it being an important step in the nuclear framework for facilitating
new build nuclear investment in this country. I take on board the hon.
Gentleman’s concerns that, where we can, we should bring
measures together to Committee, to use time most effectively.
Certainly, we will try always to do that, as we understand the
pressures on time for everybody in the House. Where we can bring
matters jointly together in that way, it makes sense.
The hon.
Gentleman asked about the exchange in the other place on the comments
made by my noble Friend Lord Marland. In general, the feedback is that
people are satisfied with our proposals. EDF had some concerns about
the extension of designated technical matters to the building and
maintenance of interim stores. Its position is long-standing and so is
ours; it understands and accepts our position. Otherwise, the industry
has been happy with this clarification, which it sees as important. The
verifier will be an independent auditor. So far, the person involved
has not been appointed, because it would seem presumptuous to make an
appointment before the order had gone through the House. It will be
somebody whose independence is absolutely without question and who will
be acceptable on that
basis.
On
the five-yearly review, we are satisfied that it is entirely
appropriate. Its purpose is to enable us to be satisfied that the
funding is building up in the right way, and to require things to be
done if it is not. If the independent verifier has concerns that it is
not being done in the right way, he or she will be able to take
appropriate steps. Similarly, if it is over-subscribed, they will be
able to make an alteration to reflect that. In terms of the materiality
threshold, details need to be sorted out. We have taken a measured and
sensible approach to dealing with all the issues and the order
addresses those appropriately. Having answered the hon.
Gentleman’s questions, I hope that the Committee will approve
the
order.
Question
put and agreed to.
4.41
pm
Committee
rose.
