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PUBLIC BILL COMMITTEE: 31 OCTOBER 2017 OUTLINE OF VIEWS ON NUCLEAR SAFEGUARDS BILL

The Nuclear Safeguards Bill (https://services.parliament.uk/bills/2017-19/nuclearsafeguards.html) represents an important but limited step in the process of withdrawal from Euratom, and this article focuses on the context and effects of that step.

Background

If the UK is to maintain involvement in the international nuclear community, it must have in place an internationally acceptable safeguards regime. Detailed regulations and adequate resource within the Office for Nuclear Regulation will be needed to operate and enforce that regime.

An acceptable safeguards regime is the first step towards replacement of the existing Euratom and bilateral nuclear cooperation agreements (NCAs) on which the UK relies. It will not be possible to conclude or even make meaningful progress with the negotiation of replacement NCAs until the UK can demonstrate that it will have an acceptable replacement safeguards regime in place on withdrawal from Euratom.

In context of the challenging withdrawal timetable, the replacement UK safeguards regime will need to be such that no reasonable counterparty to any NCA negotiation can delay or disagree on the basis of inadequate safeguarding. To avoid any perceived competitive advantage and to facilitate agreement of replacement NCAs, the new regime is likely to need to carry forward the full scope of the Euratom safeguards regime, which goes beyond the current UK Voluntary Offer Safeguards Agreement (VOSA) and Additional Protocol.

To maintain international acceptance, the UK will also need to conclude negotiations with the IAEA on a replacement VOSA and Additional Protocol, both of which are currently predicated on Euratom membership. The new UK domestic safeguarding regime must then fulfil those agreements.

Purpose of Nuclear Safeguards Bill

Within its limited ambit, the Nuclear Safeguards Bill is broadly an effective but small step towards implementation of an internationally acceptable safeguards regime (https://publications.parliament.uk/pa/bills/cbill/2017-2019/0109/18109.pdf).

The Bill is limited to the creation of enabling powers for subsequent safeguards regulations. To avoid a disruptive hiatus in international nuclear cooperation, primary focus should already be on:

  • Preparation of those regulations;
  • Ensuring that ONR has sufficient resources to take over full responsibility for safeguards in 2019; and
  • Detailed proposals and assurances surrounding negotiations with Euratom and IAEA, and with states with which the UK will need to enter into replacement NCAs.

Crucially, the Nuclear Safeguards Bill cannot be regarded as a “contingency” (as stated by Greg Clark in the second reading debate https://hansard.parliament.uk/commons/2017-10-16/debates/84828D23-EAA6-4855-99D0-4C47BD5D3633/NuclearSafeguardsBill) to be used only if the UK is not able to conclude a satisfactory agreement with Euratom.

  • Unless the UK remains a full member of Euratom (whether permanently or during any transitional phase following exit from the EU), the legislative powers and additional ONR responsibilities set out in the Bill are required as a matter of urgency. Any delay in relation to the above tasks on the basis that the Bill may not be required would be an extremely high-risk strategy (hansard.parliament.uk/commons/2017-10-16/debates/84828D23-EAA6-4855-99D0-4C47BD5D3633/NuclearSafeguardsBill)
  • In the absence of full Euratom membership, continued reliance on Euratom safeguarding arrangements would entail acceptance and payment for full application of relevant treaty obligations, regulations (including Commission Regulation (Euratom) 302/2005), inspections, enforcement powers and ECJ jurisdiction. Even then, it is likely that the UK could continue to operate within Euratom NCAs only with the agreement of each state counterparty to those NCAs. The UK would still need to replace the IAEA VOSA and Additional Protocol to reflect the UK’s changed status in relation to Euratom, so amendments to Section 93 of the Energy Act and other legislation referred to in the Bill would remain necessary.

If in referring to the Nuclear Safeguards Bill as a “contingency”, government is indicating a desire to continue full Euratom membership, at least during a transitional phase, this is to be welcomed (although unnecessary express reference to Euratom in the UK’s notification of withdrawal under Article 50 will not have assisted in achieving this).

Contrary to the government’s stated position, there are good legal arguments against any necessity to exit Euratom at the same time as exiting the EU. The Commission statement in its recommendation for a European Council decision authorising opening of negotiations on UK withdrawal simply acknowledges that Article 50 applies to Euratom. This is correct, but does not address the question as to what application of Article 50 means in context of the Euratom Treaty.

Jonathan Leech & Rupert Cowen, 6 November 2017

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact Jonathan Leech or Rupert Cowen on 020 7947 5354 or by email on: rcc@prospectlaw.co.uk and jrl@prospectlaw.co.uk.

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A NEW NUCLEAR SAFEGUARDS REGIME: A NEW CHALLENGE FOR THE UK

Keen “Brexatom” watchers will recently have picked up on remarks made by the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, on the setting up of a domestic “nuclear safeguards regime”.

As a result of our withdrawal from Euratom we will no longer fall within Euratom’s safeguards regime, and with nothing else in place the UK’s relationship with its nuclear trading partners could be seriously affected. It could, for example, have an impact on the ability of potential nuclear new build organisations in France, Japan, the US, China and Korea being able to export reactor designs and physical nuclear power plant components to the UK.

What is a nuclear safeguards regime?

The safeguards regime is administered by the International Atomic Energy Agency (IAEA) and ensures through physical inspection that:

  • those countries which are signed up to the 1970 Treaty on the Non-Proliferation of Nuclear Weapons (NPT) do not manufacture or acquire nuclear weapons, and;
  • the five defined nuclear weapons states (China, Russia, UK, France and the US) do not assist other countries to acquire nuclear weapons. The regime is not mandatory for the nuclear weapons states, but each has entered into equivalent voluntary arrangements.

The application of safeguards in the UK is more than a little complicated because of the UK’s status as both a nuclear weapons state and a Member State of the EU, and the fact it did enter into a voluntary arrangement with both organisations in 1978.

Euratom, which is administered by the European Commission, has established its own similar system of safeguards additional to the NPT requirements which require Member States to have high standards of materials accountancy and to make their nuclear facilities available for inspection as part of ensuring nuclear material is not diverted. Such inspections are usually done through both installed cameras and visits to facilities. Sellafield, with its large quantities of separated plutonium, is inspected about three times a month. Annually over 200 inspections are carried out in more than 100 UK facilities.

Why is the announcement important?

When the UK leaves Euratom, unless alternative arrangements are in place, only the voluntary arrangement with the IAEA will apply; the stricter Euratom requirements will not. This will be a cause for upset amongst our trading partners, with whom we will have to enter into bilateral Nuclear Co-operation Agreements instead.

Mr Clark’s announcement included the vital importance that the new domestic nuclear safeguards regime, to be run by the Office for Nuclear Regulation (ONR), is as comprehensive and robust as that currently provided by Euratom, and that it should exceed the standard that the international community would require from the UK as a member of the IAEA.

International oversight will be a key part of the future regime. The UK is currently seeking to conclude new agreements with the IAEA that follow the same principles as the current ones. These will ensure that the IAEA retains its right to inspect all civil nuclear facilities, and receive all current safeguards reporting, ensuring that international verification of our safeguards activity continues to be robust.

The ONR is currently assessing what this might mean for them and it is highly likely they will need to recruit additional resources to build the necessary in-house capability. They will need not only additional people but also equipment, infrastructure and processes. In evidence to the BEIS Parliamentary Committee, ONR said this will be “very challenging” and that only a basic system could be in place within the two years. The immediate question therefore is whether having only a basic system in place will be enough to satisfy our trading partners. If not it is highly possible that the UK’s ability to build new nuclear power stations will fall further behind schedule, and that the UK’s world leading civil nuclear sector will no longer be able to operate and generate income in the way it currently does.

About The Author

Edward de la Billiere is a Solicitor and co-founder of Prospect Law. He trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric, which was taken over by the nuclear operator BNFL. He has retained a strong interest in infrastructure and, in particular, energy related projects and has advised recently in respect of energy projects for corporate, local authority and private clients across the UK and internationally.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts who provide a complete service for clients.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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DECOMMISSIONING LARGE SCALE ENERGY PLANTS: DISCHARGING LIABILITIES SAFELY AND COST EFFECTIVELY

PART II: THE DECOMMISSIONING PLAN

In the first article of this series we pointed out the desirability of having a robust and appropriately underpinned plan to discharge any liabilities arising from the operation of a facility, whether it be nuclear, conventionally hazardous, or physically complex, and the importance of a rigorous risk and uncertainty analysis, and the advisability of having independent verification of the plan. This article looks at the other key elements contributing to a robust plan.

Any plan has to be technically sound and should be developed against appropriate base case assumptions. The assumptions should be clearly stated and justified. Current good or accepted and internationally benchmarked practice need applying to the proposed decommissioning technologies and techniques. Quantities and metrics must be stated and justified, eg with regard to waste arisings.

Scope must be adequately defined with bounding assumptions and exclusions clearly stated. All work necessary to successfully deliver the proposed end state needs explaining and justifying. In particular the scope of work must be fully understood, with plan describing ‘how’ it will be carried out and not ‘what’ is required – its surprising how often this aspect is overlooked. A programmatic approach should normally be adopted pulling together inter-related elements of scope and allowing work packages or projects to be expressed in the context of an overall end state objective.

Schedules must be logically linked and reflect all the scope and assumptions needed to successfully deliver the plan: durations are reasonable, and there is a clearly described critical path through to the proposed end state. Interdependencies and milestones should be clear and realistic and schedules need to tie in with risk mitigation measures (see part 1 of this article).

Cost estimates must be as robust as possible at that stage of the plans maturity and must reflect the totality of the scope required, being phased according to scope and schedule. The techniques used to estimate cost and uncertainty should be appropriate and reflect good international practice. Cost and quantity data sets must be appropriately robust and wherever possible benchmarked. Where uncertainty exists, eg with regard to waste disposal, this should be made clear and appropriate contingency values applied.

It is important to fully consult regulators with consent milestones clearly articulated and demonstrably deliverable. In the latter regard adequate allowance in terms of time and effort should be made for developing appropriate cases and the iteration of these with the regulator before consent is granted. Stakeholders are also an important part of this process and should be engaged during the development of the decommissioning plan, and where appropriate their responses captured in the plan.

The above is of course predicated on the operator having a mature quality management system in place to provide oversight and governance during development of the plan and this should also be documented in the plan. Many operators back this up with independent verification of the plan’s quality during and after its drafting, with the operator documenting how the verifier’s findings have been incorporated into the finished product. Such verification is particularly valued if the operator is dealing with highly politicised or heavily regulated decommissioning programmes, providing authorities and the public with assurance that the programme is being or will be delivered safely, cost effectively and in an environmentally responsible manner.

Funding the plan is a separate but very important matter and clearly the two are closely inter-related, for which several models exist. These will be discussed in a future article.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

Chris Kaye is a nuclear specialist and senior commercial executive with over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts, to Board and Ministerial level, within Government and private sectors. From 2006 and prior to joining Prospect Group in 2017 Chris was a function head of a major UK Non-Departmental Public Body. There he was responsible for assurance and oversight of all the UK private sector nuclear operators’ decommissioning strategies, plans and costings on behalf of the UK Government where a third party or the taxpayer has an interest in funding and risk.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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US AND KOREAN NUCLEAR PLANT CANCELLATIONS: IMPLICATIONS FOR UK NEW NUCLEAR BUILD

The US currently has 100 nuclear power plants in operation supplying about 20% of its power needs. A further four were under construction, two each in Georgia and South Carolina, until the owners of the South Carolina plants recently announced the cancellation of construction of its two Westinghouse AP1000 units, Summer 2 and 3.

Summer 2 and 3 had been under construction since 2013, with original operational dates of late 2019 and late 2020.  However, due to construction delays and cost overruns, these were later revised to December 2022 for Summer 2 and March 2024 for Summer 3.  The finances were a key factor in the decision to cancel construction, with the original estimate of $11.5 bn having more than doubling to $25 bn. The reasons behind this are no doubt complex, but as the US has not constructed a new reactor since the 1970s, the loss of nuclear expertise must be a factor.

Summer 2 and 3 were intended to showcase advanced nuclear technology and pave the way, along with the Georgia plants – also Westinghouse AP1000s, for a nuclear renaissance in the US.  A further four AP1000s and 12 SMRs (Small Modular Reactors) are currently proposed and several more are in the early stages of planning. The fate of these and the two Georgia plants remains to be seen.

The economics of nuclear have always been the subject of much debate, but what seems to have swayed the South Carolina decision to cut losses is the availability cheap natural gas, enabled by the more liberal attitude to fracking in the US, and a flat energy demand due to improved energy efficiency. Ironically, the cancellation of Summer 2 and 3 will mean South Carolina’s coal plants will need to run for longer, whereas they were originally intended to be shutdowns upon the nuclear units coming online. A decision to proceed or not with the Georgia plants is expected soon.

The Westinghouse bankruptcy has also complicated the picture in the US, with its AP1000 design being used for the South Carolina and Georgia projects and its role being reduced to a vendor supporting the EPC. Their situation has also had an effect in the UK, with Toshiba’s stake in Nu-Gen now being considered by KEPCO. Rather than utilise the Westinghouse design, which was approved by the UK nuclear regulator, ONR, in March this year, KEPCO wants to use its own technology, which will cause a delay in construction of the Moorside plant while the necessary regulatory design assessment is undertaken.

The South Korean nuclear industry is also in difficulty, with the new anti-nuclear government suspending construction of the Shin Kori 5 and 6 nuclear plants for several months while it undertakes a public consultation on their future. This decision has generated much debate in the country and is seen as a threat to its nuclear exports, and KEPCO’s future Nu-Gen.

Decisions to be taken in the next few months will be crucial for the future of nuclear in the US and Korea. The Korean decision in particular will have an impact on the Moorside project in the UK, and may put the government’s climate change targets in jeopardy. Unlike the US, it is doubtful that the supply of natural gas from fracking will be a welcome alternative.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

Edward de la Billiere is a Solicitor and co-founder of Prospect Law. He was educated at Newcastle University and trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric, which was taken over by the nuclear operator BNFL. He has retained a strong interest in infrastructure and, in particular, energy related projects and has advised recently in respect of energy and waste projects for corporate, local authority and private clients across the UK and internationally.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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DECOMMISSIONING LARGE SCALE ENERGY PLANTS: DISCHARGING LIABILITIES SAFELY AND COST EFFECTIVELY

PART I: EFFECTIVE DECOMMISSIONING PLANNING

A robust plan for discharging the liabilities associated with a facility’s operation is important not just for compliance with legislation but to establish the correct basis for funding and implementing safe, environmentally sound, and cost effective decommissioning for that facility whether it be nuclear, conventionally hazardous, or physically complex. The plan will form the basis on which work is presented to market and, once contracted, performance monitored.

The UK’s Nuclear Decommissioning Authority terminated a major clean up contract for 12 nuclear sites earlier in 2017 because of the emergent mismatch between the work that was specified in that contract which dated to 2012, and an emerging work that actually needed to be done (click here to see Prospect blog covering Written Statement to Parliament by Energy Secretary Greg Clark on 27 March 2017) While this was no reflection on the performance of the contractor it did illustrate the desirability of having a fully underpinned decommissioning baseline plan prior to any commercial commitment.

Of course the robustness of the baseline will be a function of the time prior to executing the work: while it is self evident that however well you plan, time and the reality on the ground will act to confound that plan, this should not put off the need for proper underpinning at appropriate points through the lifecycle of the facility irrespective of whether that facility is nuclear or conventional.

In that regard treatment of risk and uncertainty is a key factor. While this is recognised, rigorous analysis can often be overlooked when it comes to developing a decommissioning plan.

There are two principle objectives to risk and uncertainty analysis – informing contingency values in the cost estimate and identifying work required to mitigate or to retire each risk.  While the former is well recognised the influence of the latter may not be, especially if budgets are tight. To help address this the UK has implemented a formalised and structured approach to risk mitigation within decommissioning planning, with its own technical baseline specifying for each relevant risk the work needed, timescale, owner and cost. Crucially this approach links execution of the work to the timescale required for the ‘solution’ within the decommissioning plan (which in turn influences, and should reduce, the cost contingency value going forward).  Parking or transferring risk should not normally be an option: the operator should implement measures to address these even if not under its direct control.

For this reason and others there are obvious attractions to both the operator and the regulator in having the facility’s decommissioning plan independently verified in order to provide assurance to regulators, funding bodies, and others that the liabilities attaching to that facility can be discharged safely, cost effectively and in an environmentally responsible manner.

Please click here for an appendix covering factors any decommissioning plan should take into account

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

Chris Kaye is a nuclear specialist and senior commercial executive with over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts, to Board and Ministerial level, within Government and private sectors. From 2006 and prior to joining Prospect Group in 2017 Chris was a function head of a major UK Non-Departmental Public Body. There he was responsible for assurance and oversight of all the UK private sector nuclear operators’ decommissioning strategies, plans and costings on behalf of the UK Government where a third party or the taxpayer has an interest in funding and risk.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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CHRIS KAYE JOINS PROSPECT’S NUCLEAR TEAM

Prospect is pleased to announce the further development of its multi-disciplinary infrastructure practice through Chris Kaye joining the firm as an expert on the negotiation and management of multi-billion pound infrastructure projects, particularly in the nuclear sector. On behalf of the Department of Energy, Chris led the review of Hinkley Point C’s waste and decommissioning plans, providing advice to the Secretary of State on the approvability of the power station’s Funded Decommissioning Programme, and liaising with private and public sector advisory bodies.

Prospect remains the only regulated firm to offer combined legal and technical services to clients in the infrastructure sector and its position is further strengthened by the addition of Chris Kaye.

Chris has over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts within Government and private sectors. From 2006 to 2016 and prior to joining Prospect Group, Chris was a function head of a major UK Non-Departmental Public Body, where he was responsible for assurance and oversight of the private sector nuclear operator’s decommissioning strategy, planning and costing where the Government has an interest in its funding and risks. This work was primarily directed at assuring the robustness of detailed plans for decommissioning the UK’s most modern nuclear power station fleet and associated spent fuel liabilities, with a total value of c. $25bn.

Chris has also led the assurance, on behalf of the UK’s Department of Energy, of all three of the UK’s new nuclear power plants’ decommissioning plans and cost estimates, in order to support the UK Government’s decision on whether or not to approve the operator’s liabilities funding arrangements for this first of a kind development. This included Hinkley Point C.

Outside the UK, Chris also led assurance reviews of Canadian, Swedish and Swiss nuclear facilities’ decommissioning plans on behalf of their respective governments and has provided consultancy advice to the Taiwanese and Chinese governments and private enterprises. Prior to 2006, Chris worked as an independent consultant on various technical assignments for major clients including the UK Atomic Energy Authority, Arthur D Little and the UK Government, significantly influencing the eventual decision to create the Nuclear Decommissioning Authority (NDA).

Chris also participated in reviews of private sector companies’ performance as part of the UK Business Excellence Award process utilising the European Foundation for Quality Management Business Excellence model. He has also worked in a variety of roles in the UK electricity supply industry. Initially covering waste management R&D and policy, for 12 years Chris led the negotiation and management of all contracts for the supply of uranium, new fuel, and spent fuel management services for the UK’s private sector nuclear fleet. Chris has also been a ‘high risk projects’ reviewer for the UK Cabinet Office Infrastructure and Projects Authority, participating in major government infrastructure projects in overseas construction, justice, immigration, rail franchise and national emergency planning. He is a Member of the Chartered Institute of Purchasing & Supply.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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EURATOM

Despite rumours to the contrary, the UK government is now set in its declared determination to leave Euratom at the same time as departing from the EU.

On a political level, maintaining membership of Euratom would entail accepting jurisdiction of the ECJ.

The Government has not demonstrated that it has any desire to consider the absence of legal necessity to leave Euratom at the same time as leaving the EU, or at all. On the other hand, there does also appear to be a gradual recognition of the implications of Euratom exit, including various implications relating to energy security, management of the UK’s nuclear legacy and continued supply of medical isotopes.

It is to be hoped that a sufficient number of Euratom members will have an interest in maintaining a relatively stable UK nuclear industry and will agree to practicable transitional arrangements, allowing the UK sufficient time to develop its own adequate safeguarding arrangements as a basis for negotiation of bilateral nuclear cooperation agreements with the partners on whom the UK relies.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article. 

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information, please contact Jonathan Leech and Rupert Cowen on jrl@prospectlaw.co.uk and rcc@prospectlaw.co.uk, or by telephone on 020 7947 5354.

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PROSPECT ADDRESSES THE INTERNATIONAL FRAMEWORK FOR NUCLEAR ENERGY COOPERATION (IFNEC) MEETING IN PARIS

Rupert Cowen, a specialist nuclear lawyer at Prospect Law, has addressed the International Framework for Nuclear Energy Cooperation (IFNEC) Meeting in Paris on the impacts of Brexit on the European Atomic Energy Community (EURATOM).

Click here to download the presentation slides

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk

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INTERNATIONAL NUCLEAR LIABILITIES: THE CHANGING LANDSCAPE

The global nuclear liabilities landscape is changing. The last 2 years have seen significant developments, with the Convention on Supplementary Compensation finally entering into force on 15 April 2015 and significant progress towards ratification of the 2004 Protocols to the Paris and Brussels Conventions.

Please click here to download an article on this subject prepared by two of Prospect Law’s specialist nuclear lawyers, Jonathan Leech and Rupert Cowen.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article mentioned above remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk

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WRITTEN STATEMENT TO PARLIAMENT OF ENERGY SECRETARY GREG CLARK, 27TH MARCH

In a Written Statement to Parliament issued today, 27 March, the Energy Secretary Greg Clark has made the following announcement in relation to the management and decommissioning of twelve nuclear reactor sites in the UK.

1. Termination of NDA contract with Cavendish Fluor Partnership (CFP)

The contract with CFP was for the management and decommissioning of 12 redundant Magnox nuclear power sites. The NDA ran a £6.1 billion tender process in 2012 which resulted in a 14 year contract being awarded to CFP. However, in the statement issued today the Government said it had become clear that “there is a significant mismatch between the work that was specified in the contact as tendered in 2012 and awarded in 2014, and the work that actually needs to be done.”

The statement continues to say that the scale of the additional work “is such that the NDA Board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender”.

The NDA is consequently exercising its right to terminate on 2 years’ notice.

The Government in the statement emphasised that the termination “is no reflection on the performance of Cavendish Nuclear or Fluor” and that they will continue to manage the sites for another 2.5 years, during which time the NDA will establish arrangements for a replacement contracting structure to be put in place.

2. Settlement of Outstanding Litigation

In the same statement the Government announced that the NDA has settled outstanding litigation claims against it by Energy Solutions and Bechtel in relation to the 2014 Magnox award. NDA has withdrawn its appeal against the judgment of the High Court of 29 July 2016. The settlements were made without admission of liability on either side, but it was clear the statement said “that this 2012 tender process, which was for a value of up to £6.1 billion, was flawed”.

Because of the amount of the settlement payments and the costs (£76.5 million to Energy Solutions and £8.5m of costs, and $14.8m to Bechtel plus costs of around £462,000) there will be an inquiry into the conduct of the 2012 procurement process and the reasons why the 2014 contract proved unsustainable.

The inquiry will be led by Steve Holliday, the former Chief Executive of National Grid.

We will update on this situation as it develops.

For any immediate enquiries please contact Jonathan Leach on 020 7947 5354 or by email on jrl@prospectlaw.co.uk

Prospect Law provides legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

This article remains the copyright property of Prospect Law and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law.

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