2017 deadline at risk as draft regulations to deal with liability problems are put on ice

The UK’s new nuclear power stations face delay after the government put off a decicion on who should insure them.

The UK is committed to bringing in a European law that will increase nuclear operators’ liability from about £140m to £500m. But lawyers have warned that the commercial insurance market will not be prepared to underwrite the risk.

Now it has emerged that draft regulations on how to deal with the issue – which were expected before Christmas – have been put on ice at least until the summer.

A lawyer close to the scheme said: “Nothing has been produced and I am told there is no expected date for publication.”

Alistair Smith, Parsons Brinckerhoff’s nuclear director, said insurance was one of “many small hurdles” that needed to be resolved if the first plant was to be online by 2017.

He said: “The target is feasible but to achieve it these little hurdles have got to be got out of the way so construction can begin on site by 2012.”

A government-backed insurance scheme is thought to be the most likely solution and has been adopted by countries such as Romania. But it is thought the government is holding back in the hope a commercial solution can be found.

Mark Newberry, a partner in law firm Herbert Smith, said insurance had been put on the backburner. He said: The immediate horizon is finding sites, but insurance could become a huge issue if not dealt with.”

The Department of Energy and Climate Change denied that it was being delayed indefinitely. It said: “There’s a public consultation on this planned by the summer.”

The news comes as the government launched an auction of land for nuclear power stations.

Amec is understood to be supporting a bid by French utility EDF and American firm Jacobs Engineering is backing a joint venture by German power suppliers E.ON/RWE. Atkins and Parsons Brinckerhoff are working for a consortium of Iberdrola, Suez and Scottish Power.