fixed unit price simulation for disposal of spent fuel ... - Greenpeace UK

Research Report
3. DECC Early Transfer Price. This is the discounted price charged by DECC to the utility
for early transfer of spent fuel to government before a disposal repository is available. The
sniper crosswires show the transfer point on the graph and the value of the investment
fund at that time. The transfer price appears as a brown horizontal line across the graph.
4. Pay-As-You-Go Principal. This is the accumulated value of levelised payments made
into the energy utility company investment fund. The payments are Pay-As-You-Go because
the energy company must make regular payments into the fund every year that the
nuclear power station operates. The value of the principal increases each year the reactor
operates until the reactor reaches the end of its life and is shut-down. The principal invested
then remains constant for the duration of the cooling and storage period. The Pay-
As-You-Go Principal appears as a steadily increasing linear blue line, which then levels
off horizontally when the reactor reaches the end of its generating lifetime.
5. Government Lump Sum. This is the final lump sum that is paid by the energy utility investment
fund to the government to pay for spent fuel disposal at the end of the generating
and storage period. The value of the fund appears as a purple exponential curve and
gradually increases as the fund earns compound interest. The purple curve rises quite
steeply during the reactor generating period, as regular Pay-As-You-Go payments are
made into the investment fund. Afterwards the purple curve rises more slowly as the fund
relies on compound interest alone to grow the principal and reach the final target fund
value. When the purple Lump Sum curve is below the DECC Price there will not be sufficient
money in the energy utility fund to pay the government for spent fuel disposal. (The
arrangement is very similar to an endowment mortgage, where the endowment fund only
accumulates enough to pay-off a home loan at the very end of the investment period).
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