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Nuclear Decommissioning Authority Annual Report and Accounts 2007/08

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Nuclear Decommissioning Authority Annual Report and Accounts 2007/08 Nuclear Decommissioning Authority Annual Report and Accounts 2007/08 Annual Report & Accounts 2007/08 Nuclear Decommissioning Authority Annual Report and Accounts 2007/08 Our mission is to: Deliver safe, sustainable and publicly acceptable solutions to the challenge of nuclear clean-up and waste management. This means never compromising on safety or security, taking full account of our social and environmental responsibilities, always seeking value for money for the taxpayer and actively engaging with stakeholders. Nuclear Decommissioning Authority Annual Report and Accounts 2007/08 Welcome to the NDA Annual Report & Accounts 2007/08 Presented to Parliament pursuant sections 14 [6], [8] and 26 [10], [11] of the Energy Act 2004. Laid before the Houses of Parliament 17 July 2008 HC/827. Laid before the Scottish Parliament by the Scottish Ministers 17 July 2008 SG/2008/112. Ordered by the House of Commons to be printed 17 July 2008. HC827 London: The Stationery Office. £33.45 Nuclear Decommissioning Authority Annual Report and Accounts 2007/08 Contents 1 Foreword 2 Chairman’s Report 4 Chief Executive’s Review 11 HSSE 16 Financial Review 39 Directors and Executives 47 Directors’ Report 52 Corporate Governance 55 Remuneration Report Statement of the Directors’ and Accounting Officer 61 Responsibilities 62 Statement on Internal Control The Certificate and Report of the Comptroller and Auditor 68 General to the Houses of Parliament 71 The Annual Accounts 71 Consolidated Income and Expenditure Account 71 Consolidated Statement of Recognised Gains and Losses 72 Balance Sheet 73 Consolidated Cash Flow Statement 74 Notes to the Accounts 118 Operating Units 122 Site Licensee Reports 122 Sellafield Limited (Calder Hall, Capenhurst, Sellafield, Windscale) 136 LLW Repository Limited (LLWR) 140 Magnox North (Chapelcross, Hunterston A, Oldbury, Trawsfynydd, Wylfa, MNSO) 156 Magnox South (Berkeley, Bradwell, Dungeness A, Hinkley Point A, Sizewell A, MSSO) 170 DSRL (Dounreay) 175 RSRL (Harwell, Winfrith) 180 Springfields Fuels Limited (Springfields) 185 NDA Owned Subsidiary Reports 185 Direct Rail Services (DRS) 187 International Nuclear Services (INS) Limited 188 Glossary 193 Contact Details Annual Report and Accounts 2007/08 Copyright the Nuclear Decommissioning Authority 2008, ISBN 978 010 295601 6 Nuclear Decommissioning Authority 1 Annual Report and Accounts 2007/08 Foreword progress in such a relatively short time. These achievements provide the Government with the confidence that the NDA is well equipped to tackle the considerable challenges ahead. The key priorities for the next twelve months will include driving the Sellafield competition to a successful conclusion and launching the final competitions with a clear and robust timetable; planning how to reduce fixed costs and increase spend on “The NDA has put in place decommissioning; and establishing a clear the first overarching Strategy strategy for getting the best value from the for the clean-up and NDA’s assets. decommissioning of the public nuclear legacy.” Since it became operational in April 2005 the Nuclear Decommissioning Authority (NDA) has made significant progress in its Malcolm Wicks mission to bring about a more competitive Energy Minister environment for the safe, secure, and cost effective clean-up of legacy waste. In that time it has developed a clear understanding of the scale and nature of the UK’s nuclear liabilities and a clear planning process for managing those liabilities. It has put in place the first overarching strategy for the clean- up and decommissioning of the public nuclear legacy and overseen the restructuring of the nuclear legacy industry, making excellent progress in introducing competition to nuclear decommissioning and delivering substantial efficiency savings across its estate, whilst also overseeing steady but significant improvements in health, safety, security and environmental performance. It is a credit to the skill, determination and sheer hard work of the whole team at the NDA that it has made such considerable Foreword Nuclear Decommissioning Authority 2 Annual Report and Accounts 2007/08 Chairman’s Report in implementing our competition policy which has seen the first Parent Body Organisation (PBO) contract let for the Low Level Waste Repository (LLWR) and will see the selection of a new PBO for Sellafield in 2008. This progress gives us confidence that the core strategy of the NDA is robust. In its implementation we have to respond to and if possible anticipate changing circumstances. During the year we have seen the development of Government “Our progress gives us policies both for nuclear new build and for confidence that the core the management of waste. We have strategy of the NDA is provided input to the development of these robust.” policies which provide clarity about the future environment in which we operate and Stephen Henwood we will develop our plans to reflect them and Chairman to take advantage of the opportunities offered. I was delighted to be appointed Chairman of the NDA in March 2008 and look forward to When the NDA became operational in April working with the Board and senior 2005, it meant that for the first time one management team as we take forward our body took responsibility for the whole of the challenging and exciting mission. I would civil nuclear legacy. Since then, defining the also like to thank Nick Baldwin, our senior liability and estimating the cost of removing independent director for his considerable it has been a key objective. Inevitably contribution as Interim Chairman. attention focuses on the headline figure which has grown due to a number of factors, The first priority of the Board remains to including greater understanding of the ensure that our work is undertaken safely, hazard, widening scope and better definition securely and with respect for our social and of future projects. It is important to recognise environmental responsibilities. It is that under the headline figure are a number encouraging that we are able to report of different work streams that are at different further progress in these areas although stages of maturity and which contain there is a need for continuing vigilance. differing levels of certainty in our cost estimates. Some work streams are relatively The Chief Executive’s Review summarises mature, for example the decommissioning of the considerable achievements of the NDA Dounreay, whilst at Sellafield there remains in securing appropriate funding from the uncertainty in some waste retrieval projects. Comprehensive Spending Review (CSR), delivering on our operational plans with The last year has given us increased significant efficiency gains and the progress confidence that in those areas where our Chairman’s Report Nuclear Decommissioning Authority 3 Annual Report and Accounts 2007/08 baseline is mature, we have opportunities to make savings in the implementation phase. Equally it has emphasised that in the less mature areas there is potential for further movement in the costs and on occasions we must change our priorities to address emerging issues. Stephen Henwood Our estimating of the cost of future liabilities Chairman has come under scrutiny by the Public Accounts Committee. We look forward to the Committee’s report and will work to support the implementation of its recommendations. The review of our funding model in line with the recommendation of the Department for Business, Enterprise and Regulatory Reform (BERR) Select Committee is particularly important to us and provides an opportunity to ensure that our funding mechanisms reflect the nature of the activity we perform. This will assist us in securing best value from our supply chain and provide greater certainty to our many stakeholders. On 11 June 2008, the Board announced that Dr Ian Roxburgh would stand down as Chief Executive Officer (CEO) at the end of July and leave the NDA at the end of the year. The performance recorded in this report is testimony to the significant achievements of the NDA, under Ian’s leadership, by an organisation that didn’t exist when he was appointed as its CEO. He leaves with our thanks and best wishes for the future. As I have increased my knowledge of the NDA and its activities since March, I have been impressed by the capability and commitment of its staff but also by that of its many stakeholders. A shared sense of the importance of a successful NDA is very clear and I thank both staff and stakeholders for that. Chairman’s Report Nuclear Decommissioning Authority 4 Annual Report and Accounts 2007/08 Chief Executive’s Review the end of 2008. Despite changes to our competition schedule, following market and regulatory feedback, only three NDA sites will remain under public sector management by the end of 2008. Whilst the target to reduce the civil nuclear liability by 10% by the end of 2010/11 falls outside the period, substantial improvements have been made each year both in the liabilities estimate and in the process of its “Having consolidated our production. We have now published an underpinned nuclear liabilities estimate understanding of the estate against which future movements will be we inherited, we have measured. focused on developing our role as a strategic authority.” Financial performance during the year as a whole was sound. We ended the year ahead Dr Ian Roxburgh of budget and, as at 31 March 2008, had Chief Executive and Accounting Officer generated an increase in cash of £395 million. Despite operational income being The NDA has continued to deliver its behind budget due to problems resulting mission and secure better value for money, from fragile and ageing plants and facilities, having overcome a number of challenges total income was £1.46 billion, after realising during the year. income from waste substitution. As we move into the new Comprehensive Following the 2007 Comprehensive Spending Spending Review period, we have reflected Review funding settlement, we consulted on on progress in delivering the Public Service and secured Government approval of our Agreement (PSA) target agreed during the first three year Business Plan.
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