UK's nuclear clean-up programme to cost billions more than expected

The public body charged with overseeing the dismantling of Britain's network of atomic power and research stations will reveal on Monday that its estimates for the lifetime cost of the programme has risen by billions of pounds.

Despite this, the Nuclear Decommissioning Authority (NDA) will say in its annual report that it is getting to grips with the clean-up problem because the rate of cost growth is slowing year-on-year.

Yet the soaring costs will alarm industry critics at a time when the government is trying to encourage construction of a new generation of atomic power plants while plans to construct a permanent home for high-level radioactive waste are stalled.

In the NDA's 2011 annual report the provisional cost of dealing with the UK's nuclear legacy was put at £53bn, compared with a 2010 figure of £49bn. The new number in the 2012 set of accounts is expected to be around £55bn. But under previous accounting methods, the figure historically used has risen to well over £80bn with some predicting the final bill could exceed £100bn.

Soaring costs have already caused serious tensions with the private contractors who manage the NDA's most financially demanding site, Sellafield in Cumbria, and put pressure on a second private clean-up contract for old Magnox power stations scheduled to be awarded next year.

The NDA declined to predict the latest figure for lifetime clean-up costs, saying only "we are publishing these numbers on June 24 with our annual report", but it confirmed it is looking at the future of the Sellafield clean-up contract with fresh eyes.

The contract with Nuclear Management Partners (NMP) – a consortium made up of British company Amec and Areva of France and led by URS of the US– was first signed in 2010 for five years with an option to roll it over for up to 17 years at a total cost of more than £22bn.

The NDA is now in talks with NMP, with the possibility it could re-tender the contract to outside parties before its first break point in March 2014 or even take Sellafield management back into state hands, at least for a temporary period.

NMP said it was still "hopeful" of retaining the contract but admitted it had not been without problems so far. "There have been some achievements but this is a complicated site and there are always room for improvements," a consortium spokesman said.

The image of NMP was not improved when Sellafield Ltd, the name the consortium operates under in Cumbria, received a £700,000 fine from a court in Carlisle earlier this month for dumping low-level radioactive waste in a local landfill site.

The MP for Copeland, Jamie Reed, has recently written to the NDA and copied in the prime minister, questioning the suitability of NMP continuing to run Sellafield, the biggest nuclear site in Europe.

In February, the public accounts committee in parliament heavily criticised NMP for "dithering and delay" and pointed out it had received £54m in performance-related fees last year despite only two out of the 14 major projects at the site being on track. The National Audit Office made similar criticisms in November amid suggestions that the final clean-up cost at Sellafield alone could eventually reach £67.5bn.