Nuclear Liabilities Fund
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The Nuclear Liabilities Fund (formerly the Nuclear Generation Decommissioning Fund) is a fund of the
UK Government ga, Rialtas a Shoilse gd, Riaghaltas a Mhòrachd , image = HM Government logo.svg , image_size = 220px , image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg , image_size2 = 180px , caption = Royal Arms , date_es ...
to provide arrangements for funding certain long-term costs for the
decommissioning Decommissioning is a general term for a formal process to remove something from an active status, and may refer to: Infrastructure * Decommissioned offshore * Decommissioned highway * Greenfield status of former industrial sites * Nuclear decommi ...
of eight
nuclear power stations A nuclear power plant (NPP) is a thermal power station in which the heat source is a nuclear reactor. As is typical of thermal power stations, heat is used to generate steam that drives a steam turbine connected to a generator that produces elec ...
formerly owned by
British Energy British Energy was the UK's largest electricity generation company by volume, before being taken over by Électricité de France (EDF) in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal-fired power ...
, now EDF Energy. Responsibility for the fund within government lies with the
Shareholder Executive The Shareholder Executive (ShEx) was a body within the UK Government responsible for managing the government's financial interest in a range of government-owned corporation, state-owned businesses for commercial rather than political interests. I ...
, on behalf of the
Department for Business, Energy and Industrial Strategy The Department for Business, Energy and Industrial Strategy (BEIS) is a department of His Majesty's Government. The department was formed during a machinery of government change on 14 July 2016, following Theresa May's appointment as Prime ...
. The fund is incorporated as a
limited company In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by Share (finance), shares or by guarantee. In a company limited by ...
registered in
Scotland Scotland (, ) is a country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a border with England to the southeast and is otherwise surrounded by the Atlantic Ocean to the ...
and is owned by the Nuclear Trust. It consists of five trustees, three appointed by the
Secretary of State for Energy and Climate Change Her Majesty's Principal Secretary of State for Energy and Climate Change was a British government cabinet position from 2008 to 2016. The Department of Energy and Climate Change was created on 3 October 2008 when then-Prime Minister Gordon Brown ...
and two by the owners of the nuclear power stations, now
EDF Energy EDF Energy is a British integrated energy company, wholly owned by the French state-owned EDF (Électricité de France), with operations spanning electricity generation and the sale of natural gas and electricity to homes and businesses through ...
. 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 ga, Rialtas a Shoilse gd, Riaghaltas a Mhòrachd , image = HM Government logo.svg , image_size = 220px , image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg , image_size2 = 180px , caption = Royal Arms , date_es ...
as part of the preparations for the
privatisation Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of
British Energy British Energy was the UK's largest electricity generation company by volume, before being taken over by Électricité de France (EDF) in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal-fired power ...
. 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 A pressurized water reactor (PWR) is a type of light-water nuclear reactor. PWRs constitute the large majority of the world's nuclear power plants (with notable exceptions being the UK, Japan and Canada). In a PWR, the primary coolant (water) is ...
(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 £232million and thereafter received £4million 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 £6million but in addition the fund received £275million in 7% Guaranteed Bonds issued by British Energy, entitlement to 65% of British Energy's free cashflow in each year and £150,000 per tonne in respect of fuel loaded at Sizewell B, the UK's sole PWR station. * The trustees ceased to have responsibility for adequacy. The newly created
Nuclear Decommissioning Authority The Nuclear Decommissioning Authority (NDA) is a non-departmental public body of the Department for Business, Energy and Industrial Strategy, formed by the Energy Act 2004. It evolved from the Coal and Nuclear Liabilities Unit of the Department o ...
(NDA) became responsible for determining liabilities. A first review of the fund was due 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 450million British Energy shares. These were immediately sold to investors at a price of £5.20 per share, raising £2.34billion. 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 £4.421billion, taking the total Fund value at that date to £8.3billion. 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 uncontracted nuclear liabilities relating to the assets as they arise.


See also

*
Nuclear power in the United Kingdom Nuclear power in the United Kingdom generated 16.1% of the country's electricity in 2020. , the UK has 9 operational nuclear reactors at five locations (8 advanced gas-cooled reactors (AGR) and one pressurised water reactor (PWR)), producing 5. ...


References


External links


Nuclear Liabilities Fund website
{{authority control Nuclear power in the United Kingdom Department of Energy and Climate Change Government-owned companies of the United Kingdom Nuclear liability