Electricity Privatisation (Hansard, 12 December 1988)

§ 2. Mr. Speller
To ask the Secretary of State for Energy if he will ensure that Her Majesty's Government take on no liability for the cost of decommissioning any nuclear power stations built after the electricity generating industry has been privatised.

§ The Secretary of State for Energy (Mr. Cecil Parkinson)
After privatisation, electricity customers will continue to pay, as they do now, the anticipated costs of decommissioning. The electricity industry already makes full provision for these costs and will continue to do so over the lifetimes of future stations. But the Government are taking powers in the Electricity Bill to enable them to contribute, subject to parliamentary scrutiny, to unanticipated increases in the costs arising from changes in public policy.

§ Mr. Speller
Does my right hon. Friend agree that once an industry is privatised it is the duty of the private owner to take all risks and not to pass them to anyone else? I do not question for a second the need for payment for existing plants that Governments of all complexions have put up in the past, but how does my right hon. Friend cover the case after privatisation of people being told by the private owner that Government will carry the cost of insurance?

§ Mr. Parkinson
As I pointed out, it will be for the industry to make provision for anticipated costs. However, if the nuclear installations inspectorate suddenly decided that, instead of allowing the decommissioning of power stations to take place over X years, they should take place in half X years, that could give rise to costs. That is an example of a change in public policy that the company would not have been able to anticipate. In those circumstances, and only in those circumstances, it would be reasonable for the taxpayer to contribute.

§ Mr. Lofthouse
Is the Secretary of State aware that Mr. Christopher Harding, chairman of British Nuclear Fuels, recently told a Select Committee that BNF was contractually committed to the CEGB to the tune of £1,400 million to take nuclear waste at its disposal plant? Will that cost fall on the private sector, or will it be met by the Government?

§ Mr. Parkinson
The hon. Gentleman makes a mistake which seems to be entrenched in the thinking of 628 Opposition Front Bench spokesmen. Nuclear costs are being incurred now. Last year, £700 million was set aside in the accounts of the CEGB to meet the cost of future decommissioning and waste processing. A huge provision —to date, £3.5 billion—has been set aside, and that is built into the prices that customers are presently paying.

§ Dr. Michael Clark
In the forthcoming Bill, will my right hon. Friend consider quite precisely what the limits of expenditure may be for the private sector when it inherits the nuclear power stations so that investors will know precisely their liabilities and the best possible price can be obtained for Big G and Little G?

§ Mr. Parkinson
We are saying that all anticipated costs will have to be met—as they are now and as they have been for the last 30 years, although that seems to take the Opposition by surprise—by the customer. Those costs will continue to be paid. We are proposing to expose those costs and to say that if there is to be an increase in payment or a grant as a result of a change in public policy, we shall come to the House and explain it. For the first time, the House will know about nuclear costs and can have justified to it any costs incurred by the Government in making these grants.

§ Mr. Blair
Is the Minister not aware that the costs anticipated by the Central Elecriticity Generating Board are generally thought to be incredibly low? Is it not the case that his Bill will provide for grants or loans up to £2.5 billion per time? Why should the private sector take the profit while the public sector retains the risk?

§ Mr. Parkinson
I had hoped that the hon. Gentleman was being misquoted in the press, but clearly he is totally misinformed. What exists at the moment is a liability to meet decommissioning costs. At present that is paid by the customer, but it is totally underwritten by the Government. We are saying that in future a third party will be available to share part of that risk. That party is the shareholder. The more risk that we leave with the Government, the higher the price that the industry will obtain. From what the hon. Gentleman says, one would think that it is the City which receives the price and the taxpayer who pays it. It is the other way round. If he got that into his head, he might start to understand these matters.

§ Mr. Stern
On a directly related subject, does my right hon. Friend agree that it will fall to the privatised industry to bear the costs—however great they may be, at any time in the future—of the poisons that have been poured into the atmosphere by fossil-fuelled power generation for an untold number of years?

§ Mr. Parkinson
Yes. We hear a great deal about this. If I catch your eye, Mr. Speaker, I shall take part in the later debate. In that debate we shall talk about the costs of alternative sources of energy, which are substantial. Each year, as taxpayers and customers, we are spending an amount equal almost to the total amount of grants for which the Electricity Bill will provide.