Nuclear Energy (Financing) Bill

New Clause 1

Report on proposed payments to a nuclear administrator or relevant licensee nuclear company

“(1) Prior to making payments for the purpose described in section 41(2)(c), the Secretary of State must prepare and publish a report on the proposed payment and must lay a copy of the report before Parliament.

(2) Before the payment is made, the report under subsection (1) must be approved by the House of Commons.”—(Alan Brown.)

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following:

Amendment 1, in clause 1, page 1, line 15, at end insert—

“(6) “Owned by a foreign power” means owned by a company controlled by a foreign state and operating for investment purposes.”

Amendment 2, in clause 2, page 2, line 14, at end insert—

“(c) the nuclear company is not wholly or in part owned by a foreign power, and

(d) the fuel rods for the company’s reactor are supplied by a UK based company.”

Amendment 6, in clause 3, page 3, line 8, at end insert—

“(e) detail of any public funding agreed as part of the project development and the services being provided for this funding.”

Amendment 9, page 5, line 21, at end insert—

“(4A) The Secretary of State must lay a report before Parliament in respect of each project in relation to which a nuclear company has been designated under section 2(1) before exercising the power under section 6 (1), setting out—

(a) the expected overall capital cost of the prospective project,

(b) the expected up-front cost of the prospective projects,

(c) the general terms of the project for the sale of electricity onto the grid, including—

(i) a statement of whether the Government has offered the nuclear company a minimum floor price mechanism for the sale of electricity onto the National Grid,

I express my condolences on the untimely passing of Jack Dromey. I pass on my sympathies to his family, particularly the Mother of the House.

I rise to speak to new clause 1 and amendments 6 to 9 in my name. I make it clear at the outset that I still oppose the Bill. The strategy is completely wrong, but I tabled these amendments to seek transparency and to see whether there is any seriousness to ministerial words about their willingness to consider amendments and their openness to further parliamentary scrutiny.

Let me start with amendment 9, which is all about ensuring that Parliament has a fuller understanding of what sums are involved and what commitments the Government will be making as regards any new nuclear project. The Minister has been very good at telling us about the mythical savings that will accrue via the regulated asset base funding model introduced by this Bill—they are estimated at between £30 billion and £70 billion.

What the Government are not so good at is telling us what money they want to commit for the likes of Sizewell C. In effect, they are telling us, “Let’s save money for bill payers by signing up to a less bad deal for a new nuclear project.” According to the impact assessment, the capital and financing cost is going to be in the region of £40 billion to £60 billion for a new nuclear power station. It is a strange logic to tell us that £50 billion being added to our energy bills at the time of a cost of living energy crisis is somehow a good thing. By default, the Government are also confirming just how much of a stinking, rotten deal Hinkley Point C was for bill payers if we are saying that we can save that much money compared with the contracts for difference model for Hinkley C.

We know that eye-watering sums are intended to be committed, but the Bill, as it stands, gives the Secretary of State carte blanche to sign off on a new nuclear deal. Amendment 9 tries to address that by setting out key criteria that should be laid in a report before Parliament. In Committee, and at other times when there has been quizzing on cost transparency, we have been given the con trick, “We cannot share that information for commercial confidentiality reasons.” If Parliament is told that the capital cost of a new power station is some £23 billion, which is the current estimated cost for Hinkley Point C, we do not know what the breakdown of that £23 billion is, so there is no way that that would breach commercial confidentiality. We have a right to know what up-front costs are being committed to or forced on bill payers, and it is important we know that for any deals on the sale of electricity. As I said, at the moment the Government tell us how much money the RAB model will save, but they want to continue to be vague on how much a new project will actually cost. We have the smoke and mirrors argument that it is a basic RAB payment that somehow, in the future, gets partially negated with the sale of electricity to the grid.

Another important aspect of amendment 9 is decommissioning. At present, decommissioning and tidying up the existing nuclear legacy is another albatross around the necks of taxpayers. An estimated £132 billion is to be spent in the next 100 years. This sum increases every time the Nuclear Decommissioning Authority gets new information and updates the estimate. We are told, in this case, that decommissioning is baked into the up-front prices of the contractual agreement going forward. Amendment 9 therefore tries to elicit more information on this aspect. We understand that construction can take 10 to 15 years, and that thereafter there is supposed to be a 60-year operation of the new nuclear station before decommissioning occurs. The defuelling stage takes up to five years before the rest of the site can be properly dismantled. How robust will be the decommissioning costs that are baked into the up-front contract, which means that they are estimated to be some 75 years ahead of when the decommissioning task is supposed to begin?

It is clear that there are massive financial risks surrounding this. Insurances or bonds must be required if there is to be any chance that the liability does not just pass to the bill payer in future, especially if the nuclear company becomes insolvent. We also need protections to ensure that it does not become an attractive proposition in future for a company to become insolvent and simply pass on the liabilities. Amendment 9 seeks to get some clarity for Parliament on those considerations.

Amendment 6 is also about transparency of costs—in this case, the up-front costs, or costs borne by the taxpayer. Much of the rationale for the amendment is the Budget commitment in the Red Book of £1.7 billion to enable a final investment decision for a large-scale nuclear project in this Parliament. That is an astonishing sum of money to commit taxpayers to. In Committee, the Sizewell C Consortium stated that it had no idea where that £1.7 billion comes from, and the Minister still has not been able to explain it to me, either in Committee or following a written question.

Again, I suggest that for full transparency, parliamentarians need to know what money is being thrown at nuclear projects up front and what the likes of this £1.7 billion actually procure. At the moment, all we know is that it is what the Treasury thinks is required to get Sizewell C to final investment stage. However, this sum of money could otherwise be used to see major construction of renewable projects. It could see the Coire Glas pumped hydro storage scheme constructed and the Cruachan Dam pumped hydro extension undertaken. Instead, at the moment, it looks as though it will be spent on design, accountancy and lawyer fees. This is despite the fact that we are continually told that Sizewell C is practically designed already by utilising the design from Hinkley Point C. If this money for development is for other purposes such as, as has been mooted, a stake in the consortium, then we should still know what it is being utilised for. It should not be too much to ask this of Government for them to accept amendment 6.

Amendment 7 tries to get some clarity on the operation of the plant going forward. The great myth of nuclear power is that it is supposed to be so reliable and provides base-load. We keep hearing that nuclear power is required for when the wind does not blow, but the reality is that nuclear is too inflexible to be properly compatible with intermittent renewables, and a nuclear station is either on or off—that is the limit of its flexibility. From the answer to a written parliamentary question I submitted before Christmas, it also seems that nuclear power stations tend to go off for way longer than would be expected if nuclear power were so critical and reliable. Looking back at the year-on-year average since 2010, each nuclear power station is down for nearly 25% of a typical year. If we look at Hartlepool, each reactor is down for 90 days a year on average. Dungeness was down for nearly 200 days a year on average until its early closure. Even Sizewell B, the youngest power station in the existing fleet and the one with the greatest remaining lifespan, has been non-operational for 64 days a year on average since 2010. To me, that is truly astonishing and again destroys the argument for why new nuclear is required.

As one of the witnesses in Committee stated, each nuclear station actually requires further nuclear as a back-up because of all those outages. Amendment 7 would provide Parliament and bill payers with at least some clarity on how a new station was performing in its ability to generate electricity at times of need.

Amendment 7 would also provide for annual reporting and assessment of the condition and operability of a station. If we look at the existing fleet of nuclear reactors, we see how the anticipated lifespan and operation of a plant can change quickly, with Dungeness closing seven years early. Considering how it was effectively offline for the preceding two years, had Dungeness been subject to the report requirements I am asking for, at least Parliament would have understood the situation there. They would probably have elicited more questions from parliamentarians about the state of that power station. If we are looking at a 60-year operational contract—bear in mind that no nuclear power station in the UK has ever reached the 50-year milestone—it is important that, as a plant ages, parliamentarians and bill payers understand the performance of the station and, critically, its operational lifespan and any liabilities and repairs that are required. That is what amendment 7 seeks to ensure.

Amendment 8 is linked to the operation of the plant and allows for penalties if the plant is down too long. It seems logical, if we take the Government argument that nuclear power is critical, that we need to minimise the risk of extended outages. Amendment 8 would do that by giving the Government the ability to impose penalties and seek financial recovery if a station was down for too long. I have inserted a suggested timeline of 60 days, which I think is a reasonable point for penalties to kick in, especially when we look at the recent historical performance of the existing fleet. That still allows a station to be down for 15% of the time in a typical year before penalties are incurred.