Nuclear Liabilities Fund
Encyclopedia
The Nuclear Liabilities Fund (formerly the Nuclear Generation Decommissioning Fund) is a fund of the UK Government to provide arrangements for funding certain long-term costs for the decommissioning
of eight nuclear power stations
formerly owned by British Energy
. Responsibility for the Fund within government lies with the Shareholder Executive
, on behalf of the Department of Energy and Climate Change
.
The Fund is owned by the Nuclear Trust, a public trust under Scottish Law. It consists of five trustees, three appointed by the Secretary of State for Energy and Climate Change
and two by the owners of the nuclear power stations, now EDF Energy
. The trustees are also directors of the Fund as well as owning the ordinary share capital of the Fund.
. It covered the nuclear power stations owned by the company on 20 March 1996, comprising seven advanced gas cooled reactor (AGR) stations and one pressurised water reactor (PWR) station. The obligations of the Fund were set out in an agreement known as the Nuclear Decommissioning Agreement. The Fund had an initial endowment of £232m and thereafter received £4m a quarter from British Energy, adjusted each year in line with RPI.
On 14 January 2005, following the restructuring of British Energy after it required financial assistance from the government, the original agreement was terminated. It was replaced by the Contribution Agreement (CA) and the Nuclear Liabilities Funding Agreement (NLFA). Broadly, these agreements resulted in the following:
Part of the Fund’s interest in British Energy was realised on 31 May 2007, when it converted approximately 30% of its entitlement to British Energy’s free cashflow into 450m British Energy shares. These were immediately sold to investors at a price of 520p per share, raising £2,340m.
On 19 January 2009, the Fund sold its remaining 36% interest in British Energy following the takeover of the company by EDF Energy
. The sale raised a further £4,421m, taking the total Fund value at that date to £8,300m. This is to be invested to fund the long term decommissioning costs of EDF's eight former British Energy nuclear stations, plus certain other contracted and un-contracted nuclear liabilities relating to the assets as they arise.
Nuclear decommissioning
Nuclear decommissioning is the dismantling of a nuclear power plant and decontamination of the site to a state no longer requiring protection from radiation for the general public...
of eight nuclear power stations
Nuclear power plant
A nuclear power plant is a thermal power station in which the heat source is one or more nuclear reactors. As in a conventional thermal power station the heat is used to generate steam which drives a steam turbine connected to a generator which produces electricity.Nuclear power plants are usually...
formerly owned by British Energy
British Energy
British Energy was the UK's largest electricity generation company by volume, before being taken over by Électricité de France in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal fired power station....
. Responsibility for the Fund within government lies with the Shareholder Executive
Shareholder executive
The Shareholder Executive is the body within the British Government responsible for managing the government's financial interest in a range of public companies. Originally established within the Cabinet Office, it has since 2004 been part of the Department for Business...
, on behalf of the Department of Energy and Climate Change
Department of Energy and Climate Change
The Department of Energy and Climate Change is a British government department created on 3 October 2008 by Prime Minister Gordon Brown to take over some of the functions of the Department for Business, Enterprise and Regulatory Reform and Department for Environment, Food and Rural Affairs...
.
The Fund is owned by the Nuclear Trust, a public trust under Scottish Law. It consists of five trustees, three appointed by the Secretary of State for Energy and Climate Change
Secretary of State for Energy and Climate Change
The Secretary of State for Energy and Climate Change is a British government cabinet position currently held by Chris Huhne. The government department was created on 3 October 2008 when former Prime Minister Gordon Brown reshuffled his cabinet....
and two by the owners of the nuclear power stations, now EDF Energy
EDF Energy
EDF Energy is an integrated energy company in the United Kingdom, with operations spanning electricity generation and the sale of gas and electricity to homes and businesses throughout the United Kingdom...
. The trustees are also directors of the Fund as well as owning the ordinary share capital of the Fund.
History
The Nuclear Generation Decommissioning Fund was established on 28 March 1996 by the UK Government as part of the preparations for the privatisation of British EnergyBritish Energy
British Energy was the UK's largest electricity generation company by volume, before being taken over by Électricité de France in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal fired power station....
. It covered the nuclear power stations owned by the company on 20 March 1996, comprising seven advanced gas cooled reactor (AGR) stations and one pressurised water reactor (PWR) station. The obligations of the Fund were set out in an agreement known as the Nuclear Decommissioning Agreement. The Fund had an initial endowment of £232m and thereafter received £4m a quarter from British Energy, adjusted each year in line with RPI.
On 14 January 2005, following the restructuring of British Energy after it required financial assistance from the government, the original agreement was terminated. It was replaced by the Contribution Agreement (CA) and the Nuclear Liabilities Funding Agreement (NLFA). Broadly, these agreements resulted in the following:
- The renaming of the Fund as the Nuclear Liabilities Fund.
- Changes in decommissioning arrangements set out in the CA and the NLFA, such that the Fund continued to have the object of discharging the decommissioning liabilities of British Energy but also certain contracted and uncontracted nuclear liabilities. The Secretary of State agreed to fund these liabilities to the extent that they might exceed all the assets of the Fund.
- British Energy continued to pay quarterly contributions of £6m but in addition the Fund received £275m in 7% Guaranteed Bonds issued by British Energy, entitlement to 65% of British Energy’s free cashflow in each year and £150k per tonne in respect of fuel loaded at Sizewell B.
- The Trustees ceased to have responsibility for adequacy. The newly created Nuclear Decommissioning AuthorityNuclear Decommissioning AuthorityThe Nuclear Decommissioning Authority is a non-departmental public body of the United Kingdom formed by the Energy Act 2004. It came into existence in late 2004, and took on its main functions on 1 April 2005...
(NDA) became responsible for determining liabilities. A first review of the Fund was to be carried out in January 2015 by the Fund and at each ten year anniversary thereafter or at any time after 2015 on the instigation of the Secretary of State.
Part of the Fund’s interest in British Energy was realised on 31 May 2007, when it converted approximately 30% of its entitlement to British Energy’s free cashflow into 450m British Energy shares. These were immediately sold to investors at a price of 520p per share, raising £2,340m.
On 19 January 2009, the Fund sold its remaining 36% interest in British Energy following the takeover of the company by EDF Energy
EDF Energy
EDF Energy is an integrated energy company in the United Kingdom, with operations spanning electricity generation and the sale of gas and electricity to homes and businesses throughout the United Kingdom...
. The sale raised a further £4,421m, taking the total Fund value at that date to £8,300m. This is to be invested to fund the long term decommissioning costs of EDF's eight former British Energy nuclear stations, plus certain other contracted and un-contracted nuclear liabilities relating to the assets as they arise.
External links
- Nuclear Liabilities Fund website
- Planet Ark: UK nuclear liability fund gets go-ahead
- February 25, 2006, The GuardianThe GuardianThe Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
: Bill to clean up nuclear sites rises by nearly £1bn