In the United Kingdom, the two reactors at Dungeness were permanently shut down in June 2021, those at Hunterston B in November 2021 and those at Hinckley Point B in June and August 2022. Under the agreements concluded in connection with the restructuring of British Energy, the costs of decommissioning EDF Energy Nuclear Generation Group Ltd.’s existing nuclear power plants will be paid by the Nuclear Liabilities Fund (NLF). If the assets of this Fund prove insufficient, these costs will be borne by the British Government (see section 1.4.5.1.2.2 “Nuclear generation”). In 2019, EDF Energy and the UK Government (BEIS) began discussions with a view to clarifying the conditions for implementing the above- mentioned agreements, in particular as regards determining the decommissioning costs to be recovered by EDF Energy from the Nuclear Liabilities Fund and the conditions under which the British authorities may exercise their option to acquire the nuclear power plants at the end of the defuelling phase. In June 2021 an agreement was reached with the government, which specifies EDF Energy’s role in the fuel disposal phase, how and when costs will be recovered, and the terms under which the plants will be transferred to the government. This agreement updates the Nuclear Liabilities Fund Agreement (NLFA).
Main risks
- The decommissioning operations under way in France are a first for EDF, and apart from the PWR, they concern reactor technologies for which there is little or no feedback internationally. They therefore require development of new methods and technologies that are riskier than technologies for which feedback already exists.
- It will be construed that any provision relating to a future expense presents a risk which may in particular relate to changes in the administrative, regulatory, technical, economic, etc. context.
- These uncertainties and contingencies may lead to revisions of the amounts provisioned for decommissioning installations and for the long-term management of their waste.
- These uncertainties and contingencies could lead to a significant revision of the amounts provisioned. The provisions set aside may not cover the costs actually incurred in due course. Accordingly, in the United Kingdom, the agreements in force provide that the expenses related to the unloading and evacuation of the fuel, to be covered by the NLF, must be evidenced by EDF Energy and approved by the French government; failing this, they would remain the responsibility of EDF Energy.
- For nuclear power plants which EDF does not operate, but has financial interests in (China and Belgium), the Group is exposed financially in proportion to its shareholding in its contribution to future decommissioning costs.
Control actions
- For the present and future decommissioning of nuclear installations in France, and for the long-term management of waste, EDF has set up a dedicated organisation for defining the project covered by the legally-prescribed provisions, in technical terms and in terms of cost and lead times.
- The feedback from the virtually-completed decommissioning of the ChoozA PWR reactor, and the information derived from the Fessenheim studies, together with the early information on the preparation for decommissioning of that site’s reactors, render as robust as possible the studies and the estimate for the future cost of decommissioning the currently operational EDF nuclear fleet.
- The Group regularly conducts an update of the key assumptions underpinning the provisions (see note 15 to the consolidated financial statements for the fiscal year ended 31 December 2022). These information items are set out in particular in the triennial report drawn up by EDF pursuant to the French Environment Code, describing the evaluation of the expenses of decommissioning and waste management, the methods applied for calculating provisions corresponding to those expenses, and the options adopted regarding the composition and management of the assets assigned to cover these provisions. This report, together with its annual updating document, is submitted for assessment by the competent authority (DGEC).
- The 2020-2021 audit by the DGEC on the decommissioning of halted facilities (excluding PWR) and the ASN inspection in 2021 on the management of projects for decommissioning NUGG reactors, lent strength both to the scenarios examined and to the relevance of the organisation and management for the DP2D projects (Directorate for decommissioning and waste projects), which inspection found that “the process for estimating and for annual review is robust, and allows for good traceability of the assumptions used and the original data”. “The provisions are consistent with the baseline scenarios of the projects and cover the full scope of the expenses of the audited scope”.
- Governance in terms of securing the financing of nuclear expenses has been strengthened through the development of a Group policy, validated by the Board of Directors on 30 June 2021, and the creation in 2021 of a Nuclear Expense Assessment Control Function in accordance with Decree 2020-830 of 1 July 2020.
- The amount of these provisions, in accordance with the French Environmental Code, is subject to control by the administrative authority (DGEC – the French General Directorate for Energy & Climate), which verifies in particular the adequacy of the provisioned expenses and imposes a cap on the discount rate for the provisions.
- In the United Kingdom, the risk of decommissioning cost recovery has been significantly reduced by the agreement with the government. Additional risk control actions are:
- maintaining the quality of relations with the government and the NDA (Nuclear Decommissioning Authority);
- strengthening monitoring and contractual compliance arrangements, as well as reporting and performance management.
b) Waste management
In France, EDF is responsible for all radioactive waste produced during:
- the operation of the nuclear facilities operated by the Group;
- processing operations for spent fuel from reactors operated by EDF;
- decommissioning operations at the nuclear facilities operated by the Group (see section 1.4.1.1.2.3 “The issues relating to the nuclear activity – storing conditioned ultimate waste”).
In this regard, EDF has allocated provisions for the long-term management of such waste (see legal framework as set out in § a above). For each category of waste (high, medium, low or very low activity) a specific management channel is identified.
Most of the provision for the long-term management of waste concerns high-level waste (HLW) and intermediate-level long-lived waste (LLW). It is based on the assumption of geological disposal, which is the international benchmark for the ultimate disposal of high-level and intermediate-level, long-lived radioactive waste, and on the work carried out in 2006 with ANDRA, the public authorities and other producers of radioactive waste (see note 15.1 to the consolidated financial statements for the fiscal year ended 31 December 2022 and see section 1.4.1.1.2.3 “The issues relating to the nuclear activity”).
The reference cost of the storage/disposal project for High-Level Waste (HLW) and for Long-Lived Intermediate-Level Waste (ILW-LL), which enables the associated provisions to be drawn up, is laid down in the Order of 15 January 2016.
Law no. 2006-739 dated 28 June 2006 provides for a dedicated storage centre for Low-Level Long-Life waste (LLW-LL), such as the graphite of the NUGG reactors. The overall industrial scheme for the management of all LLW-LL is being defined within the framework of the PNGMDR (French National Plan for the Management of Radioactive Materials and Waste) (see section 1.4.1.1.2.3 “The issues relating to the nuclear activity”).
In the United Kingdom, under the terms of agreements entered into with the authorities, the liability and certain costs associated with the management of certain radioactive waste are transferred to the UK Government. The supplementary agreement entered into with the government in 2021 clarifies how the costs associated with waste management will be recovered.
Main risks
- As a nuclear operator, the Group is liable for assuring the safety of its own waste treatment and disposal facilities.
- As a producer of radioactive waste, the Group is liable for identifying the appropriate waste management processes. When the waste management processes are operated (within the meaning of a nuclear operator) by other players, the Group may be liable particularly in the event of an accident with damage to third parties or to the environment due to nonconformities of such waste with the specifications defined by the operators of the facilities concerned.
- A challenge to the specifications used as the assumption for accepting waste for geological disposal could lead to reassessing certain waste management methods and the related financial assumptions.
- The reservations that remain, and the supplementary investigation being carried out by ANDRA to obtain approval for the construction of the geological storage area starting, could lead to a revision of the provisions for long-term radioactive waste management.
