Lifetime cost of decommissioning the site
2.3 The Authority's estimate of the lifetime cost of decommissioning at Sellafield has been increasing sharply in recent years. The Authority presents its estimate as a provision in its annual accounts. As at 31 March 2014, the Authority estimated the Sellafield provision at nearly £48 billion after discounting future cash flows. This is around 74% of the Authority's total nuclear provision of nearly £65 billion and an increase of nearly £6 billion (14%) since March 2013. The estimated provision for the rest of the Authority's estate has remained relatively stable (Figure 1).
| Figure 1 The provision for decommissioning and clean-up of the Sellafield site1 The provision for decommissioning the Sellafield site has increased year on year, while the provision for the rest of the Authority's estate has remained stable
Note 1 The discount rates the Authority has applied to the nuclear provision are slightly different in some years but reflect HM Treasury guidance at the time. Source: Nuclear Decommissioning Authority's Annual Report and Accounts, 2009-10 to 2013-14 |
2.4 Between 2010-11 and 2013-14 the nuclear provision for Sellafield has increased by more than £15 billion. More than £12 billion of this is from increases in estimates of the cost of work required to complete decommissioning and clean up across the site. The rest is from other changes including the approach to discounting and inflation, and reductions in the estimate of the provision because of work done in-year. Between 2012-13 and 2013-14, cost estimates increased by more than £6 billion, driven by increases in some major project costs and the removal of previously assumed efficiencies that had been built into the performance plan but which the Authority subsequently deemed to be unachievable. Figure 2 shows the breakdown of increases in the provision for Sellafield between 2010-11 and 2013-14.
2.5 The Authority considers that the increase in its lifetime cost estimates is mainly because it now has a better understanding of the scale and nature of the risks and challenges on the site. In particular, it reflects an improving understanding of the challenges, potential technical solutions and uncertainties still involved in the decommissioning projects and programmes to retrieve, package and store high risk, hazardous materials. It also reflects a more realistic assessment of the level of efficiencies achievable within the plan. We discuss these projects and programmes in more detail later in this part.
2.6 The Authority bases its management judgement of the overall nuclear provision on the lifetime plans for the sites across its estate. The Authority had intended that its Board would approve a new lifetime plan for Sellafield in April 2014. However, this did not happen until December 2014. This delay was due to Sellafield Limited delivering its proposed plan late and the Authority's Board deciding in July 2014 that it was unacceptable.
2.7 As at February 2015, the Authority's estimate of the discounted nuclear provision for the Authority's estate was around £70 billion, of which £53 billion relates to Sellafield (an increase of £5 billion from 2013-14). We have not yet audited these figures. We are reviewing the Authority's assurance over the 2014 performance plan as part of our audit of the Authority's financial statements for the year 2014-15, so that the Comptroller and Auditor General can reach an opinion on whether the financial statements, including the latest estimate for the nuclear provision, are true and fair.