The Nuclear Decommissioning Authority

Last Updated: 16 September 2010

The Energy Act 2004 requires the NDA to operate its commercial assets effectively and efficiently in order to support funding.  We are responsible for a number of commercial facilities which provide a large proportion of our budget via existing contracts.  Currently this amounts to more than half of our cost base with the remainder covered by Government funding.

Commercial operations cover activities on our sites and in our subsidiaries; producing electricity, nuclear fuel, reprocessing spent fuel and transporting nuclear and non-nuclear freight. Revenue is generated from the operating Magnox power stations as well as, THORP, SMP, Springfields, Spent Fuel Services, Direct Rail Services (DRS) and our share in Pacific Nuclear Transport Limited (PNTL).

Commercial activities are forecast to decline over the short term as the Magnox power stations cease electricity production. So although commercial revenues currently provide over 50% of our total annual budget, this will decline.

The context for our revenue optimisation strategy is against a background of:

• increasing budgetary pressure on the public sector in general,
• a nuclear renaissance which has led to an evolving policy environment, and
• recent successful land sales increasing Government appetite for value realisation.

Objective

To maximise the net revenue receipts from existing and potential new contracts to offset funding demands on the Scope and Boundaries.

Interfaces

As a critical enabler the revenue optimisation strategy interfaces with all other topic strategies as it facilitates the overall delivery of our mission.   Nevertheless other Topic Strategies have the potential to impact either revenue generating capability or the value of other assets.  Accordingly the impact of such changes will always be kept under review and the Commercial strategy amended to maximise value, wherever possible. 

Credible Options

The guiding principle for NDA commercial strategy remains one of closing down operations, exiting facilities, decommissioning and cleaning up our sites.  Expansive ideas of additional commercial activities remain out of scope without express Government approval.

However, the nuclear renaissance presents alternative credible options relating to the future ownership and management of the UK nuclear infrastructure and commercial opportunities that might arise from this.

Current Position

The commercial contracts for Sellafield are predominantly managed by INS; for the sale of power from our generating stations through the Electricity Output Trading Committee (EOTC); and for the sale of fuel and intermediate products from Springfields through monthly governance meetings.  The strategies for all of the revenue streams are well developed as described below:

Electricity Generation:  Of the original 11 Magnox reactor sites only Oldbury and Wylfa remain operational. Both of these sites are scheduled to close in December 2010. Electricity generation on both sites will be extended wherever profitable dependent upon both regulatory and Government consent.

Any lifetime extensions will be managed to ensure that the resultant spent fuel does not compromise the closure of the Magnox reprocessing plant at Sellafield.

THORP:  Sellafield Ltd has contracts for storage and reprocessing Advanced Gas Cooled Reactor (AGR) fuel for British Energy (BE) and reprocessing other fuels for a number of overseas customers. All current THORP reprocessing contracts are due to be completed by 2016. Contracts for storage of AGR fuel extend to 2086.

The strategy for continued operation of THORP is included within the Oxide strategy.

SMP:  The Sellafield MOX plant continues to meet its current contractual requirements. Its future depends upon continued achievement of a sustained production rate to meet existing customer requirements.

Springfields:  Springfields Fuels Ltd (SFL) predominantly manufactures AGR reactor fuels for BE's current and future fuel requirements and performs a toll contract for the conversion of uranium hexafluoride (contracted to end in 2016).

Owing to opportunities arising from the nuclear renaissance, NDA are exploring options with Westinghouse to transfer the commercial business and contracts to them in conjunction with a long lease on the site.

PNTL:  The NDA owns seagoing vessels designed to transport nuclear and non-nuclear materials. Pacific Nuclear Transport Limited (PNTL) carries out the international shipment of nuclear materials principally to Japan on behalf of Sellafield Ltd and Areva of France. PNTL has British, Japanese and French shareholders. The NDA will continue to offer a safe and reliable sea transport service for overseas spent fuel, MOX fuel and radioactive waste products.

DRS:  DRS is a wholly owned subsidiary of the NDA, operating rail transportation services for nuclear materials and non-nuclear materials within the UK. It has recently expanded into commercial markets. Profitability maximisation is the ongoing strategy.

The agreed strategy for each revenue stream is mature and being delivered, although asset performance remains the primary risk to existing contracts and a key consideration when reviewing the possibility for potential new business.  We will evaluate, from time to time, the opportunities to dispose of assets depending primarily on the potential value and alignment with our overall mission. 

Because of its dynamic nature the Revenue optimisation strategy needs to be responsive and requires constant review and adjustment.  Asset performance is critical to maximising revenues from our commercial activities.