Michael Meacher MP

Fears about nuclear power are as commonly held as ones about nuclear weapons. When a shipment of nuclear fuel was sent from the USA to France for reprocessing recently, coverage ranged from the News of the World to the Independent, all centring on widespread safety concerns. There is less focus on the economic issues but it may be time to take a harder look, because the UK taxpayer is about to take a scandalous £600m hit, with the possibility of an additional £1bn cost to come.
The reason for this is the commissioning of the Sellafield MOX Plant (SMP), built to reprocess spent nuclear fuel for re-use in the power plants of BNFL customers. As environment minister at the time, I was unconvinced of the economic viability of the project and resisted it for three years. Unfortunately, the Prime Minister chose to override this advice and gave his approval for its go-ahead in 2001. By that time, the cost originally projected at £239m had risen to £300m.
I had resisted simply because I could not see how the poor contract scenario -the likelihood that BNFL would not win contracts to sell MOX fuel – would make it worthwhile to continue, even though the cost of construction under the previous Tory regime was now written off. To be viable, the SMP had to run at a minimum of 40% of its capacity. Currently, it is barely achieving 15%. Technical problems have plagued the plant both before and during the commissioning process. Much ‘remedial’ work has been done, leading to not just cost increases – the cost of the SMP is now put at £472m – but a total shutdown of production while the problems are being resolved. The SMP has not yet produced enough fuel to fulfil the order of a single customer. The only contract that was completed had to be sub-contracted to a Belgian competitor. In the meantime, BNFL reported an increased loss of £310m this year, making it technically bankrupt. BNFL directors attributed the losses to the costs of the SMP.
Even had the plant operated smoothly from the outset – an unusual occurrence for any project of this complexity – the economic case was fragile. You need a market to sell in and the market for MOX is terribly small. In Europe it includes Germany, Sweden, Switzerland and Belgium. From BNFL’s perspective, there’s a slim possibility that Canada might be a customer, though the British embassy in Ottowa suggests otherwise: “we see no prospect for BNFL in this market” they said.
The other customer is Japan and its importance to the SMP should not be underestimated. “Without Japanese orders, we cannot justify opening the MOX plant” said Norman Askew, then BNFL chief executive in September 2000. The date was prior to the commissioning of the plant, but subsequent to the events that have done more damage than any other to an already weak economic argument.
In 1999, it was discovered that BNFL had falsified quality control data on MOX fuel produced at a demonstration facility and sold to Japan. The Japanese public has a longstanding and deeply held concern over nuclear power. Partly this is due to the legacy of Hiroshima and Nagasaki, partly to a surprisingly poor safety record in its nuclear power industry – four people died in an accident at a nuclear power plant earlier this year. A pipe had corroded and burst. It had not been inspected for almost thirty years.
So when the scandal of falsified data was discovered, the effect on BNFL’s commercial prospects was huge. Costs to BNFL, (including compensation to Japan and shipping the fuel back to Sellafield) were £113m. The real cost to the MOX project was that it killed off the chances of selling the fuel to Japan for years to come. This year, record oil prices and a gas dispute with China have caused Japan to re-examine the case for using MOX. Even the pro-MOX lobby in Japan expects no orders to be placed before 2007 however, and the contracts are expected to go to BNFL’s French rival, Cogema.
Cogema has one great advantage over BNFL. It has successfully operated two MOX plants, one now in the process of being decommissioned, the other operating at near full capacity. In its “MOX for peace” programme, the USA has selected Cogema’s Caderache plant to convert weapons grade plutonium to nuclear fuel. It was to Cogema that BNFL turned when it desperately needed advice on how to solve some of its operating problems. “It pains me to tell you this,” said BNFL director David Bonser early in October 2004 “but one of these [outside consultants] is Cogema.
So the economic case for SMP was never strong. Official estimates suggested that – if it won enough contracts to operate for ten years – the SMP could show a profit of £216m. Naturally, this did not include the £113m costs of the data falsification scandal. More bizarrely, it did not include the SMP’s construction costs either. Nor did it include the potential decommissioning costs, which BNFL has estimated at £92m.
Sir John Bourn, the Comptroller and Auditor General has now revealed for the first time that closure is an option being considered. It may well be sensible to stop throwing good money after bad, but there’s another sting in the tail, with a potential £1bn price tag.
Next April, the Nuclear Decommissioning Authority (NDA) will come into existence. Its job is to deal with the UK’s nuclear waste mountain. Annual costs are put at £2bn. The Treasury has told the NDA that half those costs should be met by the income generated from the operation of the SMP (for which the NDA will become responsible). At the moment the eyebrow raising question – whether the plant remains open or closed – seems to be “what income?”
We must demand greater transparency from all bodies involved in this financial farrago. As minister, I was prevented by the DTI from seeing the detailed costs of the MOX plant and both BNFL and the DTI resisted my attempts to make the costs publicly available. It is surely now clear beyond any doubt that the SMP is a huge financial black hole and should be promptly closed. Instead of reprocessing the spent fuel, it should be subject to dry storage – not only environmentally better, but also £250m cheaper for the UK Exchequer and taxpayer.