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The Nuclear Liabilities Fund Limited (the “Fund”) was incorporated on 28 March 1996 with the principal object of providing arrangements for funding certain long-term costs of decommissioning the nuclear power stations of British Energy Group plc (“British Energy”) existing at 20 March 1996. These comprised, and continue to comprise, seven advanced gas cooled reactor stations (“AGRs”) and one pressurised water reactor station (“PWR”). On incorporation, and until January 2005, the Fund was known as the Nuclear Generation Decommissioning Fund Limited.

The Fund is owned by The Nuclear Trust (the “Trust”), established by deed dated 27 March 1996 (as amended with effect from 14 January 2005), between British Energy, the Secretary of State for Department for Business, Enterprise and Regulatory Reform (“the Secretary of State”), and five trustees, of whom three are appointed by the Secretary of State and two by British Energy. The Trust is a public trust under Scottish Law and its trustees are also directors of the Fund, the ordinary share capital of which is owned by the trustees.

A primary purpose of the Trust is “to protect and preserve for the benefit of the Nation the environment of the United Kingdom, by being a member, directly or through nominees, of a company limited by shares or by guarantee, the purpose of which is to receive and hold monies, investments and other assets for the purpose of making payments towards discharging Nuclear Liabilities.”

The Fund had an initial endowment of £232m and thereafter received £4m a quarter from British Energy, adjusted each year in line with RPI.

The obligations of the Fund were set out in the Nuclear Decommissioning Agreement of 29 March 1996, which was terminated on 14 January 2005 and replaced by a Contribution Agreement (“CA”) and by the Nuclear Liabilities Funding Agreement (“NLFA”) of the same date. These new Agreements were a consequence of the restructuring of BE (the “Restructuring”) which was completed on 14 January 2005. Broadly, Restructuring resulted in : .

  • The renaming of Nuclear Generation Decommissioning Fund Limited as Nuclear Liabilities Fund Limited.
  • Changes in decommissioning arrangements set out in the CA and the NLFA, such that the Fund continued to have the object of discharging the decommissioning liabilities of British Energy but also certain contracted and uncontracted nuclear liabilities (together “the qualifying liabilities”). The Secretary of State agreed to fund the qualifying liabilities to the extent that they might exceed all the assets of the Fund.
  • British Energy continued to pay quarterly contributions of c£5m but in addition the Fund received £275m in 7% Guaranteed Bonds issued by British Energy, entitlement to, initially, 65% of British Energy’s free cashflow in each year, and £150k per tonne in respect of fuel loaded at Sizewell B.
  • The Trustees ceased to have responsibility for adequacy. The newly created Nuclear Decommissioning Authority (‘NDA’) became responsible for determining liabilities. A first review of the Fund was to be carried out in January 2015 by the Fund and at each ten year anniversary thereafter or at any time after 2015 on the instigation of the Secretary of State.

Part of the Fund’s interest in British Energy was realised on 31 May 2007. On that date, the Fund converted approximately 30% of its entitlement to British Energy’s free cashflow into 450m British Energy shares. These were immediately sold at a price of 520p per share, raising £2,340m. Following the successful acquisition and restucturing of British Energy Group plc ("BE") by EdF, the sale of the NLF's remaining interest in British Energy of approxiamtely 36% was completed on 19 January 2009, raising a further £4,421m. The Fund at that date then totalled £8,300m. This will be invested to fund the long term decommissioning costs of BE's eight nuclear stations, plus certain other contracted and un-contracted nuclear liabilities of BE, as they arise.

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