Case No. UKUT-24-(LC)

) was published in December 2014. The PB Report was commissioned following concerns as to whether the UK would have sufficient coal and gas fired power plant capacity to provide reserve generation which could be delivered at short notice to balance any shortfalls in grid capacity. As part of that consideration, the PB Report specifically addressed the issue of mothballing/preservation of power stations. As characterised in paragraph 8.1 of the Agreed Statement, the PB Report, when considering the purpose, reason, and nature of mothballing, “represents an impartial detailed review of the topic in the coal and gas electricity generation industry” (we have added italics to quotations in this decision). 19.A section from the PB Report itself (section 6) is attached to the Agreed Statement as an appendix. It is convenient to quote the opening paragraphs of section 6 of the PB Report, which address the purpose, reason, and nature of mothballing/preservation power stations:“In the context of a power station the words mothballing, or preservation apply to those techniques which could be applied to the plant in order to prevent or reduce deterioration when out of service.’. When market economics are not favourable, the option to mothball the plant can be applied, but at this time it may not be known for how long the plant may be required to remain in the preserved state. Basically, there are two categories or options for preservation, namely short-term preservation, and long-term preservation. The techniques used for each option can vary significantly, together with the timescales required to successfully mothball the plant and reinstate the plant back to operational condition. These returns to service timescales can also vary significantly between technologies (Coal, CCGT or OCGT).Basically, the protection of plant from condensation, corrosion, and seizure due to lack of intended use, is primarily a matter of good engineering practice and good housekeeping.”20.It will be noted that Parsons Brinkerhoff, in the PB Report, identify two categories of mothballing; namely short term preservation and long term preservation. These two categories are discussed in detail in paragraphs 6.1 and 6.2 of the PB Report. As the description of the two categories featured in the oral arguments, it is convenient to set out each description in full.21.Short term preservation is described in the following terms, in paragraph 6.1 of the PB Report:“Short term preservation can be classed as a period of 3-12 months and typically the boilers/HRSGs are retained full of de-oxygenated water. The access doors on the steam turbine and condensers are removed to allow dehumidifiers to be installed which circulate dry air through the airspaces to prevent corrosion.Station staff are normally retained and are given alternative dates principally relating to plant preservation. The plant being out of service also provides the opportunity to carry out more routine or planned maintenance that would otherwise require[s] an individual unit or station outage.Due to the short term nature of the plant preservation, emphasis is required at all times on the ability for a rapid return to service of the plant, in order to capitalise on changes in market economics.The ability to achieve a successful and rapid return to services relies on the station having a detailed recommissioning plan which includes the cancellation of safety documentation, proof testing of safety systems and running of essential lubrication systems to allow hand turning or machine barring.”22.Long term preservation is described in the following terms, in paragraph 6.2 of the PB Report: “Long term preservation techniques (>12 months) are far more detailed than short term preservation techniques and require the boilers/HRSGs to be fully drained and dried out. Main generators are to be stored under dehumidified air and large electrical motors are to be kept dry using in built heaters where installed. Small high risk components should be removed and stored under clean dry conditions. Live water systems will require protecting against freezing by applying insulation or trace heating. External surfaces normally covered by insulation where rainwater, condensation or leakage could lead to concealed corrosion occurring. Where advanced information on the long term preservation (>1 year) is available, it is common to reduce the number of site staff down to a minimum level. These staff are then given preservation inspection and maintenance duties. One major disadvantage of this approach is the timescales required to recruit and train new operations staff, when the plant is required to return to service.”23.In terms of rating history, the hereditament was originally entered into the 2010 rating list with the following description“Power Station & Premises RV £5,647,000 with effect from 1 April 2010.”24.Gerald Eve, acting on behalf of the Appellant, appealed against this assessment on 13 April 2012. Following negotiations, which were focussed on the appropriate level of value, a revised assessment was agreed as follows:“Power Station & Premises RV £5,340,000 with effect from 1 April 2010.”25.Turning to the hereditament, it comprises land, buildings, and rateable plant within the boundaries of the Power Station. As noted above, the Power Station requires, and uses cooling water drawn from the River Trent through an intake and outfall infrastructure. External to the Power Station boundary there are the cooling water pipelines which run the length of Trent Road, from the main part of the Power Station up to the cooling water pumphouse at the junction with the B1392. The B1392 runs adjacent to the River Trent at this point, and separates the cooling water pumphouse from the riverside infrastructure. Beyond the pumphouse there are six concrete culverts (of which four are operational) installed between the pumphouse and the River Trent. The culverts take the water from the River Trent, on the eastern side of the B1392, to the pumphouse, on the western side of the B1392, at the junction of Trent Road and the B1392. These culverts were originally constructed along with a concrete apron on the riverbed to serve the original coal power station but were adapted for delivering cooling water to the Power Station when it opened in 1996. CCGT power stations comprise a gas turbine and a secondary steam turbine powered by the gas turbine exhaust heat. The cold water from the river is used to condense the steam back into water after it has been through the turbine, in order that it can be reused.26.The land on which the Appellant has constructed riverside structures/facilities for drawing in water from the River Trent, and for returning the water by an outfall to the river, is not in the ownership of the Appellant. The Appellant’s rights to install and maintain the culverts and apron were granted under a deed of grant dated 15 May 1952 by the Commissioners of Crown Lands (now the Crown Estate Commissioners) and the Trent River Authority. The deed of grant granted to the British Electricity Authority (which we assume to be the predecessor in title of the Appellant) the right to install and maintain the riverside infrastructure, and also granted associated rights to “from time to time to enter upon the said foreshore and bed of the river and inspect, repair, renew and cleanse the outfall pipes and intake channels comprised in the said works”. The inter-tidal zone of the River Trent is in the ownership of the Crown. In this section of the River Trent the Crown is also the owner of the river bed, to the centre of the river. 27.An abstraction licence from the Environment Agency allows the Power Station to extract water from the River Trent up to an average of 870,000m3 each day (subject to a maximum daily limit 984,000m3). This is delivered from the pumphouse to the main part of the Power Station by two large cooling water pumps. During the period of mothballing with which we are concerned, this licence was maintained to preserve these abstraction rights. The cooling water pumps were however switched off, and river gates were fitted, which closed off the culverts from the river. Whilst the river gates were fitted, the cooling water system could not be utilised, with the consequence that electricity could not be generated. The river gates are designed to be removeable and can be removed within a week. The river gates are part of larger section of infrastructure which is referred to by the experts as the sluice gates. The sluice gates include the fixed structure around the river gates, channels, screen and the removeable (sectional) river gates themselves.28.It was agreed that the river or sluice gates are rateable. An essential requirement of the sluice gates is that they can be closed and opened. They are therefore required to be moveable. The design of the sluice gates on the River Trent which serve the Power Station is as follows. The river gates can be fitted into fixed channels within the cooling water intake structure using a gantry system which we observed on our inspection. The channels are fixed to the concrete cooling water intake structure (CWIS). When not in use, the removeable gates are stored on a concrete storage pad adjacent to the gantry and CWIS. The river gates do not leave the hereditament but are moved between two locations. When fitted they are stacked three deep in channels in the bulkhead. When not in use they are removed, via the overhead gantry, and stored in steel racks on the concrete storage pad. The river gates are only fitted in exceptional circumstances such as an outage on the cooling water system which necessitates switching off the cooling pumps or any extended period when the station will not be generating. Since the Power Station returned to service in 2015 Mr Goodson estimates that the gates have been fitted about four times. Generally, the cooling water pumps remain operational and are used intermittently during periods when the station is not generating, in order to keep the channels and culverts clear of silt. The presence of the river gates enables the cooling water pumps to be switched off whilst protecting the culverts from further silt and mud ingress. It takes around one week to fit river gates to all the culverts and a slightly shorter period to remove them. Divers are required to enter the river to fit and remove the river gates and this is generally accompanied with a dredge of the area around the sluice gate channels. Mr Goodson explained in his evidence that the river gates do not provide a perfect seal but help to reduce the pace of the build up of silt from the river into the culverts and pipes. 29.It is agreed that the cooling water pipelines, pumphouse, and concrete culverts leading into the River Trent form part of the hereditament. This includes the culverts beneath the B1392 and the fenced compound with river frontage which comprises the infrastructure for the intake of cooling water from the river. The compound incorporates a jetty, with the gantry system mentioned above for moving the river gates into and out of fixed sluices. It is also agreed that the area immediately surrounding the culverts, including the riverbed, the concrete apron area and the river channel above the apron also form part of the hereditament. The concrete apron extends from behind the sluice gates down into the River Trent below the mean low water mark.30.The fact that the River Trent is tidal in this location means that the river carries and deposits large amounts of silt, comprising mud and other fine material. It was explained to us on the inspection that the apron and culverts, through to the pumphouse, silt up rapidly if the silt is not cleared away by regular dredging and regular water flow. As at the Material Day silt had accumulated as sandbanks within the area around the concrete apron, and had also accumulated in the chambers and culverts beneath the pumphouse and the road (the B1392). In the appendices to the Agreed Statement there is a photograph taken in 2014, prior to the recommissioning works which brought the Power Station back into electricity generation, which shows the extent of the silt which had built up in and around the concrete apron.31.Turning to the mothballing process, the Appellant announced in March 2013 that the Power Station was being placed into a long term mothballed state. The evidence of Mr Goodson is that this was the consequence of a downturn in market conditions, and thus an economic decision. What had happened was that in 2012 “spark margins”, which are the difference between the wholesale electricity price and the gas price, reduced substantially. This in turn rendered marginal the economics of older CCGT power stations such as the Power Station. It is agreed that the mothballing of the Power Station was undertaken in response to these adverse market conditions. 32.The work required to mothball the Power Station took place between April and September 2013, and included the following works:(1) Draining of the waste heat recovery boilers. This is a rateable item, but the work was non-structural in nature. The duration of the work was approximately one day.(2) Chemical coating of the external surfaces of the boiler tubes. This is a rateable item. The boiler tube bank upper sections are carbon steel, so these were spray painted with a corrosion inhibitor. The lower levels are stainless steel which did not require protective painting. The duration of the work was approximately one week. To remove the chemical coating to the boilers the gas turbines were fired up and this eradicated the coating in a single firing. (3) Chemical conditioning of the boilers. The works affected items such as drums which are not an integral part of the boiler and so are agreed as not rateable. The duration of the work was approximately two months to fit and two months to remove.(4) Drying out the storage vessels and installing dehumidifiers. It is agreed that these works did not affect rateable elements of the hereditament.(5) Opening the gas turbines and installing dehumidifiers. The gas turbines are a non-rateable item. The duration of the work was approximately two days.(6) Isolating the fuel systems and purging them of all products. The fuel systems comprise non-rateable pipework.(7) Decommissioning the water treatment plant, including removing agents and assets from site, and disposing off site. The work was not structural in nature and the duration of the work has been estimated at approximately two months.(8) Draining the gas pipeline from the National Grid compound and purging the line with nitrogen as well as shutting off all valves within the compound. The work was non-structural in nature and left the gas pipeline filled with nitrogen to prevent corrosion.(9) Removing certain items of plant (e.g. water extraction pumps to the steam turbine building). These assets comprised non-rateable items.(10) Draining the cooling water system and isolating the system. The work was non-structural in nature. It is agreed that, by the Material Day, the chemical coating to the boiler was complete and that the cooling water pipes and culverts were partially full of silt.33.Over the same period, April to September 2013, the number of staff on site were gradually reduced, leaving a skeleton staff structure in place from September 2013, whose focus was the long-term maintenance and preservation of the plant, so as to ensure that the plant was in a fit state to be recommissioned when required. According to Mr Goodson the reduction in staff was from 53 to approximately 18.34.The TEC of the Power Station was reduced to zero with effect from 1 April 2013. The TEC remained at zero on the Material Day and thereafter until the Power Station returned to service in November 2015. When the Power Station returned to service, after the recommissioning, the TEC was increased to 755 MW which reflected improvements to non-rateable elements during the 2012/13 upgrade. It has been agreed that because these improvement works were related to the upgrade of non-rateable elements, the valuation should not be increased mid-list to take account of these improvements works.35.It is agreed that there was a Limited Operational Notification (LON) certificate in place when the Power Station ceased generating and entered a mothballed state. A LON certificate means that the National Grid allows operation of a power station on the understanding that the power station cannot meet the full requirements of the Connection and Use of System Code mentioned above. The relevant power station is required to provide a programme for the resolution of the relevant issues which are the subject of the LON. In the present case the problems which led to the issue of the LON related to the operation of a non-rateable element of the site (the gas turbines). Specifically there were operational issues with the gas turbines. It is agreed that the LON did prevent electricity generation from the station. Some work was done to deal with these problems prior to the mothballing of the Power Station but, according to Mr Goodson, the problems were not finally resolved until September 2016, after recommissioning. Mr Goodson explained in his oral evidence that it was possible to operate the Power Station, between December 2015 and September 2016, while the LON was in place. 36.As mentioned above, by the Material Day, there had been significant silt build up in the pipes and culverts, and the creation of sand banks around the river infrastructure. As part of the mothballing process, it was accepted that once the Power Station and the cooling water system were taken out of service, and regular dredging ceased, silt would start to accumulate around the apron and in the culverts and pipes. Cooling water pump number 1 ceased operation in February 2013, and cooling water pump number 2 ceased operation on 27 May 2013. The plan below shows the arrangement of the apron and pumping station.37.There are no photographic records or bathymetric reports to demonstrate the level of silt which had built up on the Material Day although Mr Goodson did supply a bathymetric survey from 2014. As explained above, silt had started to accumulate in and around the riverside infrastructure and in the pipes and culverts served by cooling water pump number 1 once the Appellant stopped running this pump in February 2013 and suspended dredging operations. By June 2013 the relevant pipes and culverts were fully silted. There was less silting of the pipes and culverts serving cooling water pump number 2 by June 2013, because this pump was switched off much later, at the end of May 2013. The river gates mentioned above were put in place, to protect all the culverts from further silting, between 27th May 2013 and 12th June 2013. This was after cooling water pump 2 had been switched off. The fitting of the river gates was undertaken by divers in the river, and was coupled with a minor dredge of the area in which the gates were fitted, in order to facilitate their installation.38.As also mentioned above, there are records which demonstrate the extent of the silt built up around the apron in 2014. The build up in 2014 would have been greater than in 2013. It is agreed that the silt build up in June 2013 would have been sufficient to prevent the Power Station from operating, and would have required dredging and work by divers to remove the silt before recommissioning could have commenced. It is agreed that these desilting works would have been economic to undertake at the antecedent valuation date of 1st April 2008.39.Turning to the process by which the Power Station was brought back into operation (or de-mothballed), it was in late 2014 that the Appellant decided to start the process of bringing the Power Station out of mothball. Again, it is common ground that this recommissioning was undertaken in response to market conditions.40.As mentioned above, the Power Station became fully operational again in November 2015, and returned to commercial operation from December 2015. Putting to one side the cooling water infrastructure, the work required to recommission the Power Station principally involved inspecting, resealing and testing of the following items of equipment:(1)Gas turbines, auxiliaries, and generators (alternators);(2)Waste heat recovery boilers – including burning off the chemical coating and ensuring all potential contaminants removed;(3)Steam turbines, auxiliaries, and generators (alternators);(4)Fuel gas heaters and pipework;(5)Water treatment plant;(6)Chemical dosing system;(7)Cooling water system;(8)Instrumentation;(9)Electrical equipment.41.As part of the recommissioning of the Power Station the silt which had accumulated around the apron and the river gates and in the pipes and culverts had to be cleared. This was achieved by a combination of dredging the river and, in the locality of the gates and in the culverts and pipes, using divers to remove the silt, either by hand or using mechanical pumps or vacuums. The de-silting works took approximately three months. The cooling water system was then recommissioned, between January and April 2015. It was only when this was done that work on recommissioning the generating plant could begin. 42.Turning to the rateable elements of the hereditament, the Power Station receives gas from the National Transmission System, operated by National Grid, into a reception facility located within the power station. It is agreed that the gas pipeline supplying the Power Station, and operated by National Grid, together with the gas reception compound occupied by National Grid, do not form part of the hereditament. It is also agreed that the National Grid 400kV sub station and transmission line exporting electricity from the Power Station do not form part of the hereditament.43.It is agreed that the rateable elements within the hereditament comprise the following: (1)The land;(2)The buildings;(3)The civil works – concrete and steel structures, and concrete foundations;(4)The site infrastructure – roads, pavements, underground drainage, fire protection equipment and security equipment;(5)The heat recovery steam generators or boilers;(6)The gas turbine enclosures;(7)The tanks and vessels in excess of 400 cubic metres;(8)The cooling water pipes running from the Power Station boundary to the cooling water pumphouse;(9)The concrete culverts, pipelines and sluice gates forming part of infrastructure for the intake of cooling water from the River Trent and the return, by an outfall, of the cooling water back to the River Trent;(10)The concrete apron within the River Trent.44.It is agreed that the following plant and machinery on the property is not rateable and does not form part of the hereditament:(1)The gas turbines, generators, and associated equipment;(2)The steam turbine, generator, condensers, and associated equipment;(3)The control equipment, valves, and instrumentation;(4)The process pipework within the power station boundary;(5)Other mechanical and electrical equipment.