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Publicatie Laka-bibliotheek:
THORP: The case for contract renegotations (1999)

Auteur	M.Sadnicki, Barker, MacKerron
Datum	juni 1999
Classificatie	2.05.8.35/11 (GROOT-BRITTANNIË - SELLAFIELD - THORP)
Voorkant

THORP: THE CASE FOR CONTRACT RENEGOTIATION

Mike Sadnicki, Fred Barker and Cordon MacKerron

EXECUTIVE SUMMARY

A The reprocessing of spent fuel will play a diminishing role in the future of 
nuclear power. At issue is the pace at which a transition to an alternative spent fuel 
management strategy - based on interim storage and eventual direct disposal - can 
be completed. Although this alternative strategy is already the norm for the majority 
of the world's spent fuel, reprocessing continues in the UK and France, largely 
because of contractual commitments entered into decades ago. It is the future of 
the contracts between the British reprocessor, BNFL, and its main overseas customers 
that is examined in this Report.

B In essence, the Report asks whether these contractual commitments are, on 
economic or sustainability grounds, still worth fulfilling. Its specific point of 
departure in Section 2 is to examine why the UK Government is resisting the trend 
away from reprocessing. This is likely to be because the Government - taking its 
lead from BNFL - holds five convictions about THORP, the Thermal Oxide 
Reprocessing Plant at Sellafield:

• that continued reprocessing will make more money for BNFL than any 
alternative
strategy;
• that it will provide more employment;
• that it will contribute to sustainability through 'recycling' of plutonium and 
uranium;
• that it will bring waste management advantages; and
• that the maintenance of good trading relationships with Japan depends on the 
fulfillment of all existing reprocessing contracts with Japanese utilities.

C On the first conviction, THORP' s future cash earning potential, BNFL secured 
highly favourable 'baseload' contract terms. These were a result of the pressing 
political needs of its main customer countries and its own substantial market power. 
These terms included large prepayments towards construction costs- up to £1.9 
billion [DM 5.6 billion] - and further payments on delivery of fuel to Sellafield. 
However, when considering future cash flows, this sunk income should be ignored 
along with the more obvious category of sunk costs. So, although THORP may have 
had positive net cash flows to date, what is relevant today is whether future cash 
flows show net costs to BNFL and, if so, whether alternative strategies can reverse 
this position.

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