BNFL in crisis1 April 2000
The fall of John Taylor as BNFL’s chief executive has brought to a head a crisis within BNFL that has been developing for months. A major management reorganisation and a change in company culture are likely to be necessary for it to get back on the rails.
Following one of the most turbulent months in BNFL’s history, the company is licking its wounds and attempting to get itself back on track. The publication of a damning report by the Health and Safety Executive’s (HSE) Nuclear Installation Inspectorate on 18 February, which detailed the falsification of safety data in the production of mixed oxide (MOX) fuel at Sellafield, precipitated a crisis within and beyond BNFL.
The report concluded that: “A systematic management failure allowed various individuals to falsify quality assurance (QA) records for fuel pellet diameter measurements.
“It was not possible to establish a motive for the falsification, but poor ergonomic design of the plant, the tedium of the job and the ease with which the computer data logging system could be manipulated were seen to be contributory factors.
“Although QA data was falsified, this would have no effect on the safety of the fuel in a nuclear reactor, since the diameter of all fuel pellets is checked and recorded at an earlier stage in the process by a fully-automated system.
“We have carried out a detailed investigation into the events at the MOX Demonstration Facility (MDF). The plant is shut down and will not be allowed to restart until we are satisfied that the recommendations in our report have been implemented.
“In particular, the deficiencies found in the quality checking process will have to be rectified, the management of the plant removed and operators either replaced or retrained to bring the safety culture in the plant up to the standard HSE requires for a nuclear installation.”
The state owned company now finds itself with a new chief executive, Norman Askew, its partial privatisation plans on hold, under pressure from the UK government to carry out a radical management overhaul and with its key international customers considering how to renegotiate reprocessing contracts. So far five process workers who were immediately responsible for the data falsification have been dismissed and John Taylor has resigned as chief executive. But the fallout is likely to be more considerable.
UK energy minister Hellen Liddel wrote to BNFL chairman Hugh Collum, demanding a report on management restructuring within two months and it appears likely that significant changes at the top of the company will happen.
“We have got to look at the the top 50 or so managers, the board and the senior managers here and in the United States,” said Collum in an interview with the Sunday Telegraph. “It has been very difficult to recruit outside managers and it is going to be more difficult now. It’s obvious we have not got the structure we need and we have not got enough quality senior managers. There is nobody at board level with proper plc experience, for example.”
Norman Askew, the new chief executive, comes to the company with a reputation for transforming power companies’ efficiencies. He has been head of East Midlands Electricity in the UK and Virginia Power in the US, improving both companies’ profitablity significantly. High on his agenda is getting BNFL into a position where the government can sell a 49% stake to the private sector. The government was hoping to complete the sale before the next election, raising £1.5 billion in the process, but this timetable is no longer possible.
“There will be some delay,” said Askew. “We want to bring stability to the business before we push the button, but we remain committed.”
Since his appointment Askew has been keen to emphasise he is not planning wholesale change for change’s sake, nor is he likely to question BNFL’s basic business strategy. He has said he wants to promote younger staff within the company, bring in managers from other industries and delegate responsibility further down the management chain.
But he is also keen to reassure Sellafield and its work force that there will be no fundamental review of reprocessing as one of BNFL’s key businesses.
“Sellafield reprocessing is not as big a part of the business as it was, but 25% is still a lot and still matters,” he told the Whitehaven News. “There is a £12 billion order book for Thorp [Thermal Oxide Reprocessing Plant] alone, so you just can’t walk away from your investments and forget about it. That would be crazy. People should not get nervous about BNFL doing other things, they should see it as strengthening rather than weakening Sellafield. I have not arrived with any preconceptions or agenda, I want to listen and I am not a guy who wants to close things down but someone who is always looking for opportunities to grow and develop a business.”
The reprocessing question
Thorp separates uranium, plutonium and fission products from spent fuel. Once separated, the uranium and plutonium is available to be reused as fuel. About one third of its business comes from reprocessing fuel from the UK’s Advanced Gas-Cooled Reactors (AGR), the rest is from overseas customers, the most significant being Japan and Germany.
Thorp was commissioned in 1978 and came on stream in 1994. The initial rationale for the plant was that plutonium would be needed as a fuel for a new generation of fast-breeder reactors which would underpin energy security in the 21st century. The analysis was based on a perception of a shortage of both fossil fuels and uranium. However since the 1970s, the fast breeder programme has been wound-up in both the UK and France, with only Russia still continuing work, and the anticipated uranium shortage has not materialised; not only have more deposits been found and more effective extraction techniques developed, but the end of the cold war has resulted in a considerable quantity of redundant weapons grade uranium and plutonium. As a result the argument that plutonium is needed as a future fuel resource has weakened.
Critics argue that reprocessing spent fuel creates more problems than it solves. Plutonium is a security risk, requiring extensive protection to ensure it does not fall into irresponsible hands. Plutonium’s power to impact international politics is reflected in the need to transport MOX fuel under military style protection and the policy of the US, which rejected reprocessing in 1978 and is currently trying to persuade Russia to end its reprocessing programme.
As a result of the failure of the fast-breeder programme, an alternative method for dealing with the world’s plutonium stockpile had to be developed. MOX fuel can be burnt in conventional reactors and is central to the strategy of the UK, France, Germany and Japan to reduce the quantity of plutonium in existence throughout the world. But the political situation in Germany and Japan threatens this strategy.
The Social Democrat / Green coalition in Germany is pursuing an anti-nuclear policy and attempted to extract itself from its reprocessing contracts with BNFL in early 1999. The contracts, worth £1.2 billion over ten years, proved to be robust, the cost to Germany of reneging too great and the government backed down. But recent events have emboldened Germany’s environment minister, the Green Party’s Jürgen Trittin. Following the publication of the NII report, he said that the continued shipment of spent fuel from Germany’s reactors to Sellafield was now “completely open to question.”
The situation in Germany was exacerbated when PreussenElectra was forced to shut down the Unterweser plant after it became apparent that MOX fuel supplied by BNFL in 1997 had falsified data attached to it. Despite the fact that the fuel had been inside the reactor for almost three years with no safety problems, PreussenElectra was forced to shut down the reactor following pressure from the supervisory authorities.
In Japan, the nuclear industry is still reeling from the Tokai-mura criticality accident last September and public opinion, traditionally in favour of nuclear power, has begun to question the government’s nuclear policy. The country is going through a period of reflection on its future energy strategy and while it does so the MOX programme has been put on hold. In the wake of the falsification debacle, the Japanese government has banned further imports of MOX fuel from BNFL. The government appears likely to rein in an ambitious programme on nuclear construction and may be forced to look again at its reprocessing strategy.
Japan lacks indigenous energy resources and the development of a nuclear power programme burning both uranium and plutonium was seen by the government as the best means to ensure energy security. Given Japan’s lack of alternative energy sources it seems likely it will remain committed to nuclear power and to burning MOX fuel, but recent events mean the nuclear industry is now more vulnerable to criticism.
A further problem is the MOX fuel rods delivered to Kansai Electric’s Takahama PWR, for which BNFL provided false data. Kansai cannot now burn them in the reactor and Japan’s Ministry of International Trade and Industry has called on the UK to return the fuel to Sellafield. This is no easy task as the fuel was originally supplied to Japan from the US, which still claims title over it. Returning the fuel to the UK would require an act to be passed in the US Congress and the approval of all nations whose waters the ship would pass through. The transport would also require armed protection. The UK and Japanese governments are in discussion on what options are available for dealing with the fuel.
The alternative to reprocessing and then burning MOX is to not separate spent fuel and treat it as waste. This is the strategy adopted by the US. Its main benefit is that plutonium remains tied up within the spent fuel matrix and cannot be used to make bombs, but opponents of the ‘once-through’ cycle argue that it is extremely wasteful as 90% of the uranium within the fuel rods is lost, as is the plutonium. Reprocessing also reduces the volume of high level waste, thus reducing the quantity of material that will eventually need to be buried in geological repositories or treated in some other way. They point to the difficulties the US is having in establishing a site for the permanent disposal of spent fuel and argue that technologies which address the spent fuel problem should be encouraged.
William Walker, professor of international relations at St Andrews University, Scotland, is a leading critic of reprocessing. He argues that the political and financial commitments made in the 1970s ‘entrapped’ those involved in the industry into backing reprocessing even when its central justification, a shortage of alternative fuels, no longer held.
“Thorp has done the nuclear industry a great deal of damage and made the waste issue very difficult,” he said. “If the industry had decided to run Thorp down in the early 1990s rather than bringing the plant online, BNFL would be easily privatisable now.”
“What makes the case so extraordinary is that the alternative – spent fuel storage – was well-known to be cheap, safe and easy. Yet it was never seriously considered. Worse still, the government and BNFL mounted a systematic campaign from the Seventies onwards to keep storage off the agenda lest Thorp suffer from the competition. Equally extraordinary, no study of extraction from Thorp has been carried out by any British government despite the enormous hassle that the project has caused and the doubts about its prospects.”
The UK Department of the Environment, Transport and the Regions (DETR) now faces another major decision. Whether to approve the start up of the Sellafield MOX Plant (SMP). The MOX fuel so far produced at Sellafield has been made in the MOX Demonstration Facility, a pilot plant. Many of the problems the NII raised, such as the poor ergonomics and the tedium of the testing procedure, which it cited as reasons why operators decided to falsify data, do not exist in the SMP. But the DETR has said it will make its decision, one over which it has procrastinated greatly, solely on commercial grounds. It is clear it cannot approve the operation of the SMP until it has a better understanding of what demand there will be for MOX from Japan and Germany.
The whole falsification saga has exposed BNFL to criticism from many quarters. It has been portrayed as an insular company, communicating badly with stakeholders including the public and politicians, wedded to the state and with a culture dominated by people with strong technical and engineering backgrounds but lacking in an appreciation of the political sensitivities of its activities. An internal report written by public relations company Bell Pottinger, said “we have formed the impression that the seriousness of the situation has even now not hit home within the company.”
It emphasised the need for an integrated communications strategy, a clean out of senior management and cultural change throughout the company
Achieving this cultural change will be Norman Askew’s greatest challenge.