Session 2010-11
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General Committee Debates
Delegated Legislation Committee Debates

Draft Nuclear Decommissioning and Waste Handling (Designated Technical Matters) Order 2010

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

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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

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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

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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. 

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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.