The UK’s Nuclear Decommissioning Authority (NDA) has unveiled its draft Strategy and Business Plan for 2016-2019 for formal consultation. The documents, published yesterday, reflect the NDA’s five-year budget as determined through the government’s Spending Review set out by Chancellor George Osborne in November.
The Strategy, published every five years, looks at the NDA’s long-term mission through a number of themes while the Business Plan, which is published annually, takes a more focused look at the next three years of activity across its estate, together with the associated funding. The consultation period for both documents will end on 15 February.
Chief Executive John Clarke said the NDA had been able to offer savings to the Treasury of around GBP1 billion ($1.5 million) over the Spending Review period. In return, it has secured over GBP11 billion of grant funding for the next five years which, together with its income projections, will enable it to continue to make broad progress across its nuclear estate.
An early version of the draft Strategy was published last September for a period of informal engagement with stakeholders – including NDA Site Stakeholder Groups, trade unions, local authority representatives from England, Wales and Scotland, and its subsidiaries and Site Licence Companies (SLCs) – and the NDA has now published its response to the comments it received. It has concluded that “the overall direction of travel for the draft Strategy is correct.”
The NDA’s draft Business Plan for the next three years contains total planned expenditure for 2016/2017 of GBP3.2 billion, of which GBP2.3 billion will be funded by UK government and GBP900 million by income from commercial operations. Planned expenditure on site program will be GBP3 billion, while non-site expenditure is expected to be GBP200 million.
The GBP3.2 billion total compares with GBP3.3 billion in the 2015-2016 plan. Income is expected to be GBP949 million, compared with GBP1.2 billion in 2015-2016.
Planned expenditure according to site is – Sellafield Limited GBP2 billion; Magnox Limited GBP550 million; Dounreay Site Restoration Limited GBP177 million; Low Level Waste Repository Limited GBP68 million; Capenhurst Nuclear Services (owned by Urenco) GBP49 million; and Springfields Fuels Limited (owned by Westinghouse Electric) GBP33 million.
The decision taken last year to change the delivery model at Sellafield means that from the start of the next financial year, Sellafield will become a subsidiary of the NDA. This is progressing well, Clarke noted, and is “highlighting areas where real benefit will be achieved in delivering value for money and improved confidence in delivery”.
Consolidation of the updated Magnox plan – incorporating what was Research Sites Restoration Limited (RSRL) following last year’s competition, together with the funding provided in the Spending Review – “will allow the delivery of significant benefits from this revised program approach”, Clarke said.
The 2016/17 financial year will see the start of defuelling of the Wylfa reactor after its closure last month. The NDA has succeeded in extending the life of the world’s oldest Magnox plant by five years beyond the originally planned closure date, Clarke said, “making the maximum possible contribution to the UK’s energy supply and using the income from electricity sales to reduce the NDA’s call on the Exchequer.”
The continued demonstration of the UK’s ability to decommission the early fleet of nuclear power stations supports the policy of new nuclear generation being a “vital part of UK’s low-carbon energy mix in future”, he said.
The planning and execution of the transportation of a range of nuclear materials from Dounreay will continue as a priority activity, he said. The recent announcement by LLWR that the Environment Agency has approved the application for a revised Environmental Permit means the NDA can now, subject to planning consent, make decisions on lifetime capacities rather than annual disposal limits, he said.
The NDA expects to publish the finalised Business Plan by the end of March.
In its Draft Strategy, the NDA says that early decommissioning plans “inevitably focused on site-by-site solutions”, which was reflected in its first Strategy, effective from April 2011. Then, “more sophisticated generic approaches were introduced to improve the delivery of our mission and secure best value for money”.
In its latest Strategy, it identified five strategic themes under which it has grouped all its activities – site decommissioning and remediation; used fuel management; nuclear materials; integrated waste management; and critical enablers. During the development of its previous Strategy, the NDA had an approved program of key competitions to appoint PBOs for the SLCs.
“The existence of this program meant that ‘competition’ was taken to mean simply ‘PBO competition’ and that there was a medium-term resource requirement which could be planned for and retained as the organization moved progressively from one PBO competition to another,” it said. “Since our previous Strategy, the PBO/SLC contracts for Dounreay Site Restoration Limited (DSRL) and Magnox and RSRL have been placed.”
“Our experience has shown that the ability to bring fresh commercial thinking to each new competition has brought continued improvements in value for money and risk transfer. Both these contracts are based on an outcome specification – for example the achievement of the interim end state for Winfrith and defined interim states for the other sites. They are also based on an incentivised target cost contract which offers the opportunity to save over GBP2.5 billion for the taxpayer over the life of the two contracts,” it said.
As well as changing the management model at Sellafield, the NDA also changed its contracting approach at Capenhurst in 2012. “Following a significant transformation and transition process”, the site was transferred to Urenco along with the existing activities. Additionally the NDA and Urenco signed agreements for the deconversion of its uranium hexafluoride management facility constructed at the Capenhurst site. These agreements reduced the NDA’s net liabilities and enabled Urenco to invest in new facilities on the Capenhurst site.
“All of these arrangements are designed to endure for the lifetime of this Strategy and beyond. However the recent decision for model change at Sellafield has highlighted the importance of providing an agile response to changing Strategy in support of our SLCs,” the NDA said. “Meanwhile other projects, apart from those relating directly to the SLCs, may come onto the horizon, (e.g. plutonium re-use), which would entail major procurement.”
In terms of continuing contract management, the LLWR Limited contract has been renewed with a revised fee structure taking on board the lessons learnt from the first five years of operation, the NDA said. “The contract is designed to increase alignment with our long-term objectives. In particular fee earning is now based on the achievement of targets. It reflects LLWR Limited’s contribution to the national low level waste (LLW) program as well as to the running of the Low Level Waste Repository at Drigg,” it said, adding that this contract will be up for renewal in 2018.
“It is clear that contracting is critical to us, as we spend 95% of our funding externally. Contracting in its widest sense is an important capability for the whole estate to retain,” it said. “This capability includes the ability to provide effective governance for the contracting lifecycle. The combination of Competition and Contracting and Incentivisation topic strategies into one topic Strategy reflects commercial best practice. The full acquisition lifecycle is managed coherently from identification of need through procurement, into contract management, lessons learnt and planning for the next steps once the contract term ends.”
Regarding supply chain development, the NDA said that, since its previous Strategy, two significant external developments had occurred – the global financial crisis, “which has led to an increased focus on collaboration, small and medium enterprises (SMEs) and the UK Growth agenda”, and also the UK’s nuclear new build program.
“Our supply chain development initiatives have resulted in a collaborative procurement program amounting to GBP2.8 billion of spend and delivering over GBP140 million savings since 2010. We have provided suppliers with access to even more information (e.g. annual procurement plans and early market engagement sessions) to enable better planning,” the NDA said.
The NDA expects the finalised Strategy will be published in April.
Source: World Nuclear News