Justification Decision (Generation of Electricity by the EPR Nuclear Reactor) Regulations 2010

Baroness Smith of Basildon Excerpts

Wednesday 17th November 2010 Lords Chamber

Although these instruments cover funding, and I know that we have further instruments to approve, I ask the Minister now when we are likely to have the detailed funding mechanisms. This caused considerable debate earlier in the year when the previous Government started to present this under one of the energy Acts. This is of the greatest importance. The Minister may not be able to answer these questions now, but certainly I would like him to in the future. How do we make sure that these funds, which will be very large amounts of money, are not affected by such issues as bankruptcy of the companies involved; are not sold on in the money markets to other owners; or, perhaps the biggest risk, are not consumed by the Treasury long before they ever reach decommissioning of the power plants? Given the fact that it is accepted that the nuclear industry will go ahead to meet our energy needs for the future, I welcome these regulations and hope that we will move forward in a well managed and effective way to achieve that.

[Baroness Smith of Basildon]

My Lords, this has been a short but perfectly formed debate and I welcome the contributions from noble Lords. I note that the noble Lords, Lord O’Neill of Clackmannan and Lord Jenkin of Roding, may not be able to stay until the end, but I have probably benefited more from hearing them than they would from hearing me. I note also the comments of the noble Lord, Lord Teverson, on the technicality of the statutory instruments. In looking at the SIs today, I have been through more assessments, consultation documents and justification orders than I have for any other SI I ever spoke on in the other place. I am grateful to the Minister for the time he took in taking us through the process and the issues.

The three instruments before us today are linked. We have two justification decisions on nuclear reactors and a further instrument on nuclear decommissioning and the handling of waste. In all cases the Merits Committee drew special attention to these SIs because of their importance and because nuclear energy is a high-profile and sensitive issue, as was acknowledged by all noble Lords who have spoken. I am grateful to the Merits Committee for its work and I am sure that when he comes to reply the Minister will want to address the issues that it has raised.

The justification decisions are taken by the Secretary of State as the justifying authority; that is that the generation of electricity from the nuclear reactor designs, the AP1000 and the EPR involving ionising radiation, can be justified as the social, economic and other benefits outweigh the health detriments. The third statutory instrument relates to the costs of the decommissioning of waste and the funded decommissioning programme, which must be approved by the Secretary of State, setting out the likely costs of decommissioning and cleaning up the site and how those costs will be met. These three instruments strike at the heart of the issue, addressing, first, the need for new energy capacity and the ability of nuclear to provide low-carbon energy while assessing the level of risk, and secondly, the need to have a strategy and a policy for funding to deal with the waste that is created.

I want to flag up to the Minister, as did the noble Lord, Lord Jenkin, the need to move quickly on the new arrangements for the regulatory regime. I appreciate that this is not his responsibility—although he will have heard the Questions in the House on this last week—but rightly the remit of another government department. However, if there is to be public confidence in the system, the new arrangements have to be in place as the Government move forward with decisions such us those before us today. The Minister will know that the regulatory arrangements and expertise in this country are recognised and admired around the world, and we all want that to continue. Will he assure the House that his department has raised and will continue to raise this with the relevant Ministers in other departments?

We currently have 10 nuclear power stations in England, Scotland and Wales which provide 13 per cent of the total electricity used in the UK. All but one of these will be shut by 2025. If we are to maintain an energy mix using nuclear, then new stations will have to be built, as Secretary of State Chris Huhne announced on 18 October 2010 when he laid the instruments before us today. In his Statement he summed up the basis of his justification as,

“a clear need for the generation of electricity by these nuclear reactor designs ... because of the contribution they can make to increased security of energy supplies and reduced carbon emissions”.

He added:

“Against this the radiological detriment to health from these nuclear reactor designs and their associated waste facilities will be low compared to overall levels of radiation, and effectively controlled by the UK’s robust and effective regulators”.—[Official Report, Commons, 18/10/10; col. 44WS.]

Both the justification decisions were subjected to considerable consultation and no changes were made as a result of the consultation that took place. There has been some concern that there was no inquiry or hearing relating to the justification process. Does the Minister consider that the process is in any way weakened by not having any hearings?

These justification decisions are time-critical, given that the Government are committed to nuclear new build by 2017. The delays are regrettable. It would have been helpful if we had been able to get to this stage before the general election, and we have had nearly six months since then. I raise this not to apportion blame in any way but to seek the Minister’s views as to whether he considers that the Government are still on schedule for the new nuclear power stations to come into operation by 2017.

A further issue that may cause delay is the HSE licensing programme, which we have heard about already this evening. In July 2009, it was reported that the Nuclear Installations Inspectorate had written to two French companies that want to build reactors in the UK to express its concerns about the control and instrumentation—the C and I—of the European pressurised reactor, the EPR, which is one of the reactors that we are discussing today. I shall not pretend to have any great technical knowledge on these issues, but I know that C and I is also known as the cerebral cortex of a nuclear power station. It controls performance, including temperature, pressure and power outlet levels. The NII raised other related concerns; similar concerns have been raised by other regulators.

The HSE said that the EPR design in Britain could be rejected if its concerns could not be satisfactorily addressed. At the time, it was reported that, in addressing these issues, the design assessment stage could be delayed well past its expected completion date of 2011. As far as I am aware, none of the EPR reactors being built in other countries is yet in service, but the companies concerned engaged with the NII and were, and may still be, in discussion with it. The companies were confident that a solution could be reached. The NII rightly made it clear that it would not issue a licence unless it was satisfied that that design could be built and operated safely. Similar issues arise also with the AP1000.

The Health and Safety Executive has announced that it may have to delay a definite decision on whether to approve the designs of both the AP1000 and the EPR reactors. My understanding is that the HSE considers that all the technical issues can be resolved, but that there may be some delay. I was encouraged to hear the noble Lord, Lord Jenkin, say that at the EDF briefing this morning it was said that a slight delay is expected, but it would be helpful if the Minister could comment on that.

Have the Government given any consideration to possible legal challenges to, or judicial review of, these justification orders? The noble Lord, Lord Teverson, also raised this matter. If it were the case, does the Minister consider that it could significantly delay the process? Both these issues have the potential to impact on the 2017 time scales, so any reassurance from the Minister would be appreciated. Perhaps I may also raise something that is not in the justification orders: the use of mixed oxide fuel or reprocessed fuel, known as Mox. Are there plans to bring this forward at a later date? No justification order for Mox could potentially limit the scope of the reactors. It may just be that the work is ongoing, but it would be helpful to know.

I also invite the Minister to say something on any potential health risks and the level of any such risk. A number of respondents to the consultation raised concerns on this issue. It is difficult for any Government to balance risk to health and well-being against other factors. This justification order means that the Secretary of State, having examined the issue, considers that the social, economic and other benefits of proceeding with these two reactors outweigh the health detriments. The Secretary of State is charged with making an assessment not just for citizens at this point in time but for many years ahead.

I know that the Secretary of State, the Minister and his colleagues are fully aware of the weight of this responsibility and I have read his considered view in the justification documents. The Secretary of State responded to the concerns raised by using evidence from a number of studies. I invite the Minister to say something further about the relative risk and the Secretary of State's assessment.

In its submission to the Merits Committee, Greenpeace raised a number of issues about which I hope the Minister can say something, but I draw one specific issue to his attention; namely, whether decisions on justification are compatible with the European Convention on Human Rights, given they are “practice as a whole” decisions and have a wide ranging impact.

On the third SI, on nuclear decommissioning and waste handling, the Minister will understand why I want to probe the amendments made to the impact assessment. I understood an impact assessment to be a statement of fact, so I was surprised to receive notice of a change. In the original impact assessment, at several points under what was then described as the “do nothing” option, which is now called the “correct base case”, it was stated that the cost of verifying the information provided by operators in the funded decommissioning programme, or FDP, “would fall on Government”.

The new impact assessment states that there shall be no subsidy to new nuclear power stations and that operators should pay all costs. The reason for the change is that government policy is not to provide any subsidy to new nuclear power stations. The new policy is that the Government would seek to agree with the operator to recover reasonable costs incurred by the Secretary of State when verifying the information contained in the FDP. But the impact assessment adds:

“Although we would not be able to compel the operator to agree such terms, it would be likely to be in their interests and so we view it as quite likely that the costs of verification would not fall to Government”.

Is the coalition Government's policy of no subsidy now reduced to “quite likely” and only with the agreement of the industry? What discussions have there been with the industry on this change? What is its view? How likely is “quite likely”?

--- Later in debate ---

[Lord Marland]

It is all very well the noble Lord asking questions, but he should know the answer to them.

One question is why we should designate interim stores. Operators must provide for interim stores during the life of a station and it is essential to ensure that the money is set aside. I was asked whether the funds were secure. Yes, there is protection in the funded decommissioning programme and in the Act itself. Funds must be remote from the operation of the Government. Neither party, including the Treasury, can get its hands on it. That was the concern.

The two reactors are hybrids and based on the foundation of reactors already in use. Obviously, they are not the same, because the people who make them are continually trying to improve on them and technology is moving forward on that. The noble Lord asked whether other reactors would require approval. Of course they would—as, indeed, would a Mox plant, as it does not fit within this legislation.

I thank the noble Baroness, Lady Smith, very much for her co-operation in this particular SI. She let me know in advance about some of the matters of concern affecting her Benches, and I am grateful for that level of co-operation. We are trying to build a consensus and get the ball rolling as quickly as we can, and it is very welcome that on all sides of the House we seem to have a common theme. I thank her very much for that.

The noble Baroness asked whether we have considered whether there should have been an inquiry. Over three years we have had the three consultation processes that her own Government instigated, which I think is pretty exhaustive in the current circumstances. She asked whether we were on track; we are, and we have published the timetable on the DECC website. If she has time available, we would be happy to show her how to get on to it. We can keep her posted through that means.

[Baroness Smith of Basildon]

I reassure the Minister that I look at the website every single day.

[Lord Marland]

That is very gratifying, because I do not. Perhaps she would not mind telling me about the changes that are going on at the moment.

[Lord Marland]

I am extremely grateful to the noble Lord, Lord Myners, whom I much enjoy bumping into on the street every now and then. I hope that his dog is fine, and all the rest of it. I admire his honesty for saying such honest things about me, so it is a mutual appreciation society here. On the last question, noble Lords say that they are concerned, rightly, that there may be a legal challenge. We obviously feel that our case is extremely robust, or we would not be here now trying to get these regulations through.

[Baroness Smith of Basildon]

The question I was asking about judicial review or possible legal action was not on whether the case were robust. I have read all the documents and I am sure the Minister is convinced that his case and the work undertaken have been robust. The point was specifically whether legal actions would significantly delay the process beyond 2017. He may want to check on that. If there were legal actions, would that delay the process?

[Lord Marland]

Clearly they would delay the process. A legal challenge is what it says, and would delay the process, but there is no sign of it at the moment so we hope that it will not happen. As the noble Lord, Lord O’Neill, said, not everyone agrees with nuclear as being the future and we know who some of those people are. Through a consultation process over three years, with three types of consultation at least, you try and get to a hard edge on it.

I turn to the human rights issue that the noble Baroness raises. We believe that all human rights issues are compatible with legislation. On her point about no subsidy, I will repeat what my right honourable friend the Secretary of State has said—that no subsidy means,

“that there will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation”.—[Official Report, Commons, 18/10/10; col. 45WS.]

That clearly gives opportunity for a watering-down, because if similar support is made available more widely to other types of generation then obviously we will consider it from a nuclear standpoint. I hope that answers her concern in that area.

--- Later in debate ---

[Baroness Smith of Basildon]

I apologise for intervening again on the noble Lord; he has been generous in giving way yet again. He goes a long way to answering the point. The point I was asking was particularly on the waste disposal area and on the funded decommissioning programme, because no other process of energy generation allows for waste in that way. I was particularly referring to the order and the FDP. It seemed to me that it was tightening up the issues around any subsidy available and all costs would fall on the operator. Has this been discussed with the industry and what is its reaction?

[Lord Marland]

If I understand the noble Baroness correctly, the cost for provision for waste falls on the operator, who has to—as I have answered the noble Lord, Lord Teverson—provide funds at all stages of the decommissioning. That includes storage and the final decommissioning. They are fully aware of it. Clearly, we have not got to where we are now without consultation with all the operators. They understand the rules of engagement—I am not going to say they are happy with them, as I cannot immediately tell you that—and these rules are the way we are intending to proceed.

I hope the noble Baroness feels that I have answered the majority of her questions, if not all of them. As always, it is good to have a lot of questions as this is an important step change that we are making for the future of the nuclear industry.