Department of Trade and Industry 16 March 1998 Dear Mr Sadnicki, Further to my earlier letter of 2 February, I am now responding to your letter of 2 January to the President of the Board of Trade. I am also replying on behalf of the Minister for Science, Energy and Industry and the Minister of Trade. Many of your questions, particularly those probing the cost structure associated with reprocessing at Dounreay, are highly commercially sensitive. Putting such information in the public domain would compromise UKAEA’s commercial position in the ANSTO, or subsequent commercial, negotiations. Such information is accordingly commercially confidential, and it is not appropriate to disclose it to you for the reasons set out below. I have reviewed your questions to establish how much of the information you seek I am able to send you. Most of the information you have requested is contained in UKAEA documents which are commercially confidential and disclosure could be damaging to the commercial interests of UKAEA and I have concluded that, in accordance with exemption 13 of the Code of Practice on Access to Government Information, it should not be disclosed. The information you have requested that is not commercially confidential and which is contained within DTI’s files is presented in Annex A to this letter. In addition, in every instance where the DTI has been unable to provide information the reason is recorded in Annex A. As you point out it is not entirely free from doubt whether the information you have requested is environmental information as defined in the Environmental Information Regulations (EIRs). Your request has therefore been considered under the Code of Pr actice on Access to Government Information rather than the provision of the EIRs. You should note, however, that were the EIRs to apply I would consider any information which we have, and which is not disclosed in the attached Annex, to be covered by reg ulation 4(2)(e) of the EIRs. Accordingly I conclude that were the EIRs to apply to this request no further information would be disclosable. In addition, you asked that your request be considered "in the spirit of" the recent White Paper (Cm 3818) on Freedom of Information "Your Right to Know". Cm 3818 sets out the Government’s commitment to increasing pu blic access to official information. This is an issue to which the Government attaches great importance and which it is determined to get right. As it is still at the consultation stage, and the final form of the Freedom of Information Bill has yet to b e approved by Parliament, it is too early to apply the draft principles set out in Cm 3818 to specific requests. As well as setting out intended changes, the White Paper invites comments on what is proposed. Details of how to make your views known are s et out in Cm 3818. If you do not already have a copy it is available from The Stationery Office bookshops and agencies (price £9.90). It may well be, in any event, that the information requested would not be disclosable under the draft principles. The Code of Practice gives you a right of appeal against the Department’s decision to refuse information you have requested. If you disagree with our decision you should first write to me stating why you believe you are entitled to the information not withstanding the reasons I have given. If you disagree with our response to your appeal you then have a right to appeal to the Parliamentary Commissioner for Administration (The ‘Ombudsman’) who is empowered to investigate complaints in respect of the Co de. However, were this case to have been handled under the provisions of the EIRs you may wish to note that this right of appeal would not apply. The disclosure requirements of the EIRs are the subject of the usual legal remedies in such cases. Finally, as the Department has only been able to supply a quite limited amount of information, I have decided on this occasion, and without prejudice, not to charge you for providing it. However, I would point out that a considerable amount of DTI off icials time was taken up in providing this information. I have copied this reply to the UKAEA, SEPA and Mike Townsley for their information. Yours sincerely, A W Whitehead   Question Response Basic Cost Parameters R1 1. How many fuel rods are planned for shipment to Dounreay? 1300? The contract under discussion between the United Kingdom Atomic Energy Authority (UKAEA) and the Australian Nuclear Science and Technology Organisation (ANSTO) is for reprocessing a nominal 1300 spent fuel elements from the HI FAR reactor. 2. What is planned shipment each year? DTI is not aware of the planned annual shipment. This is a commercial matter for negotiation between UKAEA and ANSTO. R2 3. How many spent fuel rods are currently in storage at Lucas Heights? ANSTO has operated the HIFAR reactor since 1958. Much of the spent fuel from its nearly 40 years of operation is still at Lucas Heights where it is stored in monitored, retrievable facilities in accordance with international standards and guidelines. DTI is not aware of the number of spent fuel rods in storage at this moment. 4. How many more will be produced by the Lucas heights reactor in each year from 1998 to 2005? HIFAR is an operating reactor which means that spent fuel is discharged each month. DTI understand that 36 elements are discharged from the reactor each year. 5. What is the cooling off period at Lucas Heights before each shipment? Once discharged the fuel is stored under water for three to four years before being moved to dry storage. 6. Will 1300 spent fuel rods be ready for shipment before 2002? If the contract were to go ahead, it is envisaged that shipment of spent fuel would begin within the next 2 years and would not be complete until 2003. 7. Will any spent fuel generated at Lucas Heights be shipped to Dounreay after 2002? See answer to question 6. 8. If yes will this be part of the contract currently under negotiation, or under a separate contract? See answer to question 6. R3 9. In the current proposed contract, between which years will the reprocessing at D1204 take place? Start year 2001? Finish year 2002? The UKAEA currently propose that the reprocessing of the Australian spent fuel would take place in one campaign, possibly between 2001 and 2004. 10. What will be the annual throughput in each year of reprocessing? DTI is not aware of the planned annual throughput. This is a commercial matter for negotiation between UKAEA and ANSTO. R4 11. What is the weight of each spent fuel rod? DTI does not have this information. Future Revenue R5 12. Why is it difficult in the case of the Lucas Heights contract (to predict the future turnover)? DTI does not have this information. 13. Is there not a draft contractual agreement to refer to? UKAEA have made an offer to ANSTO for reprocessing spent fuel. Negotiations are not yet complete. R6 14. Does the £10 million difference between the two ranges quoted (for revenue associated with reprocessing) arise because of payments of £10 million in foreign currency by UKAEA? DTI does not have this information. 15. If yes, to whom are these payments planned to be made? DTI does not have this information. R7 16. What specifically are the contracts which are existing? This information is commercially confidential to UKAEA. 17. What specifically are the contracts which are under offer? This information is commercially confidential to UKAEA. 18. In what category is Lucas Heights? The Lucas Heights contract is currently under negotiation. A decision to accept the contract has not been made. 19. What proportion does it comprise of the £29 million (existing contracts) or of the £52 million (under offer)? This information is commercially confidential to UKAEA. 20. The total of the existing and under offer contracts is £81 million – what are the specific assumptions behind the remaining £19 to £39 million? DTI does not have this information. R8 21. Are there any further updates of the figures in Table 1 (UKAEA Predicted income over next 10 years)? DTI does not have this information. 22. What is the basis of the figures quoted – is the basis Present Value at 6%? DTI require a 6% discount rate to be used to calculate net present value. 23. Is the £100 million given in Table 1 calculated on the same basis as the range given in SEPA Volume 1, Annex 7? DTI does not have this information. 24. Is the £100 million given in Table 1 the same figure (i.e. using the same assumptions) as the £100 million given as the lower bound for estimated revenue in SEPA Volume 1, Annex 7? DTI does not have this information. R9 25. Are our estimates of the proportions in Column [3] correct (proportion of overall revenue derived from Lucas Heights)? This information is commercially confidential to UKAEA. 26. That is, does the Lucas Heights contract represent about one half by value of the future estimated revenue (in PV terms at 6%) from the item ‘Spent fuel reprocessing’? See answer to question 25. 27. That is, does the Lucas Heights contract represent about one tenth of the value of future estimated revenue (in PV terms at 6%) from the item ‘Conditioning wastes/others’? See answer to question 25. 28. In particular, our estimate of the total value of the Lucas Heights contract (in PV terms at 6%) in Column [4] is £9.7 million. Is this correct? See answer to question 25. 29. Can UKAEA correct this figure for us, given any improvements it can give to the figures in columns [2] and [3]? Addressed to UKAEA. R10 30. Does the estimate of revenue include an element of subsequent manufacture and sale of MTR fuel? Manufacture of MTR fuel is not included in the contract currently under negotiation. 31. How could ANSTO make use of such fuel? The Australian Government indicated in a media release last year that they intended to build a replacement reactor for HIFAR. Like HIFAR, the new reactor will produce diagnostic and therapeutic radiopharmaceuticals. It is the refore deduced that the Australians will have a continued need for nuclear fuel. 32. Is sale of MTR fuel to a third country envisaged? Manufacture of MTR fuel is not included in the contract currently under negotiation. 33. If such revenue from Australia or another country is envisaged, please give quantities, annual values and timescales. See answer to question 32. R11 34. The procedure set out in Annex A calculates a conversion factor of 0.216 to convert from the revenue PV figures of revenue in Tables 1 and 2 (PV at 6%) to annual revenue figures (£million a year) – can this conversion factor be confirmed? DTI does not have this information. 35. Alternatively, how should our estimated conversion factor be corrected in the light of corrections to the method of calculation, and/or to the assumed start date of revenue payments, and/or to the assumed finish date of re venue payments? DTI does not have this information. R12 36. Can the planned total undiscounted revenue be given? This information is commercially confidential to UKAEA. 37. Can the planned figures be given for undiscounted revenue for each year of payment? This information is commercially confidential to UKAEA. R13 38. Using 1300 spent fuel rods from request 1, the 2kg per fuel rod from request 4, and the £12.6 million total undiscounted contract value from request 12, this gives a price of about £4,846 per kg spent fuel. Can this be confirmed? See responses to R1, R4 and R12. 39. Alternatively, can the revised figure be given? This information is commercially confidential to UKAEA. Capital Costs R14 40. Has there been any investment in the period 1993-1997 in order to prepare the MTR reprocessing plant for reprocessing of Lucas Heights spent fuel? There has been no investment specific to the proposed ANSTO contract. 41. Have such costs been factored into the costing? See answer to question 40. R15 42. Has there been any investment in the period 1993-1997 in storage facilities for spent fuel prior to reprocessing? See answer to question 40. 43. Have such costs been factored into the costing? See answer to question 40. R16 44. Will any investment be required in the period 1998-2005 in order to maintain the MTR reprocessing plant for the reprocessing of Lucas Heights spent fuel? (That is independently of what the NII might say) This information is commercially confidential to UKAEA. 45. Has the cost of these improvements in the D1204 reprocessing plant been included in the costings? DTI requires the full cost of reprocessing to be covered in the price agreed with ANSTO 46. Where will the Lucas Heights spent fuel be stored prior to reprocessing? If a contract is accepted it is proposed that, following receipt at Dounreay, the fuel will be stored in the Dounreay Material Test Reactor pond facility. 47. Are the storage facilities for the Lucas Heights spent fuel adequate? All activities at Dounreay, including handling, storage and reprocessing, will continue to be subject to strict independent regulation by the Nuclear Installations Inspectorate and the Scottish Environmental Protection Agency. 48. Will any investment be required in the period 1998-2005? (That is independently of what the NII might say). This information is commercially confidential to UKAEA. 49. Has the cost of these storage facilities been included in the costings? DTI requires the full cost of reprocessing to be covered in the price agreed with ANSTO R18 50. Has UKAEA received notification from NII as to exactly what criteria they will be required to meet in providing an acceptable safety case in relation to D1204? NII criteria are set out in the Health and Safety Executive Safety Assessment Principles for Nuclear Plants, HMSO, London 1992 51. Is it likely that either remote or non-remote inspection of the dissolver and/or associated pipework will be required in preparation for the safety case? DTI does not have this information. 52. When will the safety case for D1204 be completed? DTI does not have this information. 53. When will the safety case for D1204 be presented to NII? DTI does not have this information. 54. In arriving at its costings in relation to D1204, what assumptions is UKAEA making at this stage as to the level of additional repair/renovation/improvement work which may be required in relation to making a safety case wh ich is likely to be acceptable to NII? DTI does not have this information. 55. What margins for error are allowed in relation to work required to meet the safety case for D1204? This information is commercially confidential to UKAEA. 56. What costs (other than those associated with putting right any faults found) will be associated with the preparation of a safety case in relation to D1204? DTI requires the full cost of reprocessing to be covered in the price agreed with ANSTO 57. Has UKAEA received notification from NII as to exactly what criteria they will be required to meet in providing an acceptable safety case in relation to Dounreay’s waste receipt and storage facilities? DTI does not have this information. 58. When will the safety case for Dounreay’s waste receipt and storage facilities be completed? DTI does not have this information. 59. When will the safety case for Dounreay’s waste receipt and storage facilities be presented to the NII? DTI does not have this information. 60. In arriving at its costings in relation to Dounreay’s waste receipt and storage facilities, what assumptions is UKAEA making at this stage as to the level of additional repair/renovation/improvement work which may be requi red in relation to making a safety case which is likely to be acceptable to NII? DTI does not have this information. 61. What margins of error are allowed in relation to work required to meet the safety case for Dounreay’s waste receipt and storage facilities? This information is commercially confidential to UKAEA. 62. What costs (other than those associated with putting right any faults found) will be associated with the preparation of a safety case in relation to Dounreay’s waste receipt and storage facility? DTI requires the full cost of reprocessing to be covered in the price agreed with ANSTO 63. In which years would expenditure be carried out in relation to: (a) preparation of safety cases? DTI does not have this information. 64. In which years would expenditure be carried out in relation to: (b) work to be carried out to meet safety cases? DTI does not have this information. 65. If the estimated costs are not known, how is it possible to negotiate contract details with ANSTO, without knowing what extra cost might be imposed by the NII for D1204, or for storage of spent fuel prior to reprocessing?< /FONT> The estimated costs are known by UKAEA. 66. How is it possible for SEPA to come to a view on whether or not such work is justified? DTI does not have this information. R19 67. How much would it cost to (a) replace the D1204 dissolver? DTI does not have this information. 68. How much would it cost to (b) replace the associated pipework of D1204? DTI does not have this information. 69. How much would it cost to (c) replace both together? DTI does not have this information. R20 70. Can the items of plant and infrastructure maintenance (which relate to the reprocessing of specialist material and fuel, and which otherwise would be paid for by the UK taxpayer) be listed, along with their associated capital and operating cost ? DTI does not have this information. 71. If any of these apply to the D1204 plant, does this imply that the D1204 plant would not close down if the Lucas Heights contract did not go ahead? DTI expect the D1204 plant to close if the Lucas Heights contract does not go ahead. R21 72. What would be the annual cost of mothballing the D1204 plant (ie closing it down completely without any intention of future reprocessing, but delaying decommissioning)? This information is commercially confidential to UKAEA 73. Is it correct to say that the current NII stance is that the D1204 plant cannot be mothballed? DTI is not aware that NII hold such a view. R22 74. Will the corrosion of the spent fuel necessitate any extra capital expenditure, or increased operating costs, in any of transport, handling, storage, reprocessing, over the levels of cost originally envisaged in the UKAEA application? DTI’s latest information states that all fuel under discussion shows no signs of deterioration and the contract is being negotiated on this basis. In order to comply with transport regulations the fuel would be checked before shipment. DTI require that, if a contract were to be agreed, provision would be made for dealing with fuel found to be damaged on receipt at Dounreay. R23 75. Where will the products of reprocessing be stored before packaging? DTI does not have this information. 76. Are the storage facilities for the products of reprocessing prior to packaging adequate? All activities at Dounreay, including handling, storage and reprocessing, will continue to be subject to strict independent regulation by the Nuclear Installations Inspectorate and the Scottish Environmental Protection Agency. 77. Has there been any recent investment in such storage facilities in the period 1993-1997? DTI does not have this information. 78. Will any investment be required in the period 1998-2005? DTI does not have this information. 79. Has the cost of these storage facilities been included in the costings? DTI requires the full cost of reprocessing to be covered in the price agreed with ANSTO R24 80. Has there been any recent investment in the Cementation Plant Store in the period 1993-1997? Yes, but there has been no investment specific to the proposed ANSTO contract. 81. What is the precise cost of the Extension to the Cementation Plant Store? In line with Government policy, work associated with the Extension to the Cementation Plant store will be put out to competitive tender wherever possible, so the financial provision made for this activity is commercially confi dential. 82. How will this be spread over the period 1998-2005? For the reasons given in the response to question 81, the spread of expenditure is commercially confidential. 83. Has the cost of the extension to these storage facilities been included in the costings? This information is commercially confidential to UKAEA. 84. If the Lucas Heights contract did not go ahead, what proportion of this future expenditure could be avoided? None. R25 85. Does SEPA’s imposition of a 10 year rule mean that capital investment in packaging facilities will have to be brought forward? SEPA’s imposition of the 10 year rule is still the subject of consultation. 86. What capital investments are envisaged in packaging facilities? DTI does not have this information. Operating Costs R26 87. Why cannot UKAEA allocate projected common costs and overheads between plants and processes, as any other industry would be able to do? Addressed to UKAEA. 88. While there may be some uncertainty about which plants will be operating and which not, surely there is a forward business plan which can be used as a reference case? UKAEA have forward business plans. R27 89. What is the operating cost per shipment for transport from Lucas Heights to Dounreay? DTI does not have this information. 90. Will this be the responsibility of ANSTO? Yes. 91. How many spent fuel rods will be carried per shipment? DTI does not have this information. 92. How many shipments are planned for each year from 1998 to 2005? DTI does not have this information. R28 93. What annual operating cost is assumed for storage of spent fuel prior to reprocessing? This information is commercially confidential to UKAEA. R29 94. Can the UKAEA give any information as to where the other 350 jobs are distributed? (Of 400 jobs which ultimately depend on Dounreay’s reprocessing activities, 50 direct jobs come from MTR reprocessing) Addressed to UKAEA R30 95. Can the UKAEA confirm whether this figure of 80 jobs arising ultimately from MTR fuel reprocessing is correct? Addressed to UKAEA 96. If the figure is incorrect, what is wrong with the calculation, and what is the correct figure? DTI does not have this information. R31 97. Can the UKAEA confirm whether this figure (£1.6 million per year for the total annual employee costs associated with D1204 reprocessing) is correct? Addressed to UKAEA 98. If the figure is incorrect, what is wrong with the calculation, and what is the correct figure? DTI does not have this information. R32 99. How has the cost of maintaining D1204 on standby reduced so dramatically from more than £1 million a year at 1992 price levels to less than £500,000 a year at current price levels? DTI does not have this information. 100. On the previous figure of £20,000 per person-year, the above range implies that between 25 to more than 50 jobs are required to maintain the MTR line if it is not reprocessing. Which figure is correct? DTI does not have this information. 101. Have such costs, from now to the start of reprocessing, been included in the costings? This information is commercially confidential to UKAEA. R33 102. Where is the operating team disbanded to? DTI does not have this information. 103. Who does these 55 jobs when reprocessing recommences, if it does, in 2001? DTI does not have this information. 104. What training and other human resource costs have been factored in to allow D1204 to recommence reprocessing after a down-time of several years? This information is commercially confidential to UKAEA. 105. During which years would such costs arise? This information is commercially confidential to UKAEA. R34 106. Is the 50% (raw material and consumables as a % of employee costs) figure about right for UKAEA? DTI does not have this information. 107. Applying this to the employee costs of £1.6 million per year in request 31 would give annual UKAEA Raw Materials and Consumables costs for reprocessing the Lucas Heights spent fuel rods of £800,000 per annum. Is this calc ulation correct? DTI does not have this information. 108. If the figure is incorrect, what is wrong with the calculation and what is the correct figure? DTI does not have this information. R35 109. What annual operating cost is assumed for storage of the products of reprocessing before packaging during a period of cooling after reprocessing of approximately three years? DTI does not have this information. R36 110. Will separated plutonium be one of the products obtained from the reprocessing of Lucas Heights spent fuel? If the Lucas Heights spent fuel were to be reprocessed at Dounreay, separated plutonium would not be a product. 111. Has the cost of managing such separated plutonium been incorporated in the costings? See answer to question 110 R37 112. What annual operating cost is assumed for packaging of the products of reprocessing prior to transportation? DTI does not have this information. R38 113. What annual operating cost is assumed for storage of the products of reprocessing after packaging before transportation? This information is commercially confidential to UKAEA. R39 114. What obstacles stand in the way of a return of the packaged wastes in 2004 and 2005 (that is , 3 years after reprocessing and immediately after packaging in Cement Drums)? Existing plans are based on return of waste within 25 years. The UKAEA are currently discussing with the Australians whether a shorter timescale can be agreed. 115. How could such obstacles be overcome? This will not be clear until the discussion between the UKAEA and the Australians mentioned in the response to question 114 have reached a conclusion. 116. Surely such a timescale gives ANSTO sufficient time from 1998 to construct a Cementation Plant Store to a specification identical to that of the UKAEA Cementation Plant Store Extension? Store construction is a straightforward civil engineering task that could be completed relatively quickly were a decision made to do so. R40 117. What volumes of what products will require shipment from Dounreay to Lucas Heights? Approximately 400 drums of cemented waste would arise if reprocessing of the Lucas Heights fuel were to take place at Dounreay. The final form and disposition of recovered HEU is being discussed. 118. What operating cost per shipment is assumed for transport from Dounreay to Lucas Heights? DTI does not have this information. 119. Will this be the responsibility of the UKAEA? ANSTO will be responsible for all transportation costs. 120. What will be the volumes of the relevant products per shipment? DTI does not have this information. 121. How many shipments are planned for each year from 2001 through to the planned year of last shipment? DTI does not have this information. Financial Risks R41 122. Has the possibility that the D1204 dissolver and associated pipework might need to be replaced been factored into the costings? UKAEA complete a comprehensive risk analysis before entering into commercial contracts to demonstrate that an adequate risk margin has been included. R42 123. What happens if major postponement or even cancellation is necessary to the reprocessing for example, if the UKAEA is unable to complete the reprocessing work due to major failure of the D1204 plant? See answer to question 122. 124. Are there any penalty clauses in the proposed contract, and if so, what do they specify? See answer to question 122. 125. Would the UKAEA still have to accept the full complement of fuel rods, as given in the response to requests 1 and 2? See answer to question 122. 126. What extra storage costs would the UKAEA incur? See answer to question 122. 127. Would any unreprocessed spent fuel at Dounreay be returned to ANSTO if it were not reprocessed? See answer to question 122. R43 128. Can it be confirmed that ANSTO is responsible for the shipment from Australia to Dounreay, and the UKAEA for the return shipment of waste from Dounreay to Australia? In accordance with the Nuclear Installations Act 1965 and the Paris Convention 1963, UKAEA would be the liable operator for both incoming and outgoing shipments. Contractual arrangements relating to the cost of third party lia bility, including insurance have yet to be concluded. 129. If a shipment went down in the waters of a third party (through accident or terrorist activity), would that third party be able to claim against ANSTO or UKAEA, depending on which was responsible for the journey in questi on? That would depend on the national law of the state in whose territory any accident occurred, and on which courts had jurisdiction. R44 130. What calculations have been made of such risks? (Financial risks to the satisfactory completion of the contract? UKAEA complete a comprehensive risk analysis before entering into commercial contracts to demonstrate that an adequate risk margin has been included. 131. Are private sector risk assessment methods being used? See answer to question 130 132. Have the costs of such risks been factored into the estimates on a probabilistic basis? DTI does not have this information. 133. In what proportions are the underwriting of such risks borne by (a) ANSTO (b) UKAEA? This information is commercially confidential to UKAEA. 134. Is the UK taxpayer subsidising this contract by accepting all the risk? No. UKAEA complete a comprehensive risk analysis before entering into commercial contracts to demonstrate that an adequate risk margin has been included. Decommissioning R45 135. To which facilities does the £500 million figure (decommissioning programme costs in the next 10 years) relate? The figure of £500 million is the estimated cost of the decommissioning programme to be undertaken by UKAEA at the Dounreay site over the next 10 years. 136. How is the £70 million (benefit to the taxpayer) spread over the ten years? This will not be settled until contract terms are agreed. Any profit arising from commercial activities at Dounreay is used to offset the cost to the taxpayer. 137. How much of this relates to D1204? In line with Government policy, work associated with decommissioning building D1204 will be put out to competitive tender wherever possible, so the financial provision made for this activity is commercially confidential. 138. Over what period is the total expenditure of £500 million planned? The figure of £500 million is the estimated cost of the decommissioning programme to be undertaken by UKAEA at the Dounreay site over the next 10 years. 139. How much of this relates to D1204? See answer to question 137. R46 140. If Lucas Heights reprocessing goes ahead, would the decommissioning bill increase over £500 million? There is no direct connection between the Lucas Heights contract and the cost of decommissioning at Dounreay. 141. When would decommissioning be expected to start? Decommissioning work at Dounreay is already underway. 142. Over what total period would the decommissioning now take place? Decommissioning work at Dounreay is expected to continue for at least the next 100 years. 143. What would be the expected expenditures over the first 10 years of decommissioning? £500m Final Request R47 144. Please itemise, with their values, any other major sources of cost associated with further reprocessing using the D1204, which have not been covered by the previous requests. The major sources of cost are transport, storage, reprocessing, waste treatment and disposal, all of which have been identified.