DESNZ annual report 2024 to 2025: Financial statements (HTML)

Question 1

Consolidated Statement of Comprehensive Net Expenditure

Accepted Answer

for the year ended 31 March 2025

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Revenue from contracts with customers	6.1	(70)	(4,863)	(72)	(4,096)
Other operating income	-	(1)	(29)	(13)	(39)
Total operating income	-	(71)	(4,892)	(85)	(4,135)
Staff costs	3	377	756	324	635
Purchase of goods and services	4.1	602	2,673	255	2,064
Depreciation and impairment charges	4.2	59	204	64	246
Provision and other liabilities expenses	4.3	(34)	6,474	91	(17,066)
Grants expenditure	4.4	8,055	3,287	7,628	3,337
Other operating expenditure	-	-	(7)	-	(7)
Total operating expenditure	-	9,059	13,387	8,362	(10,791)
Net operating expenditure	-	8,988	8,495	8,277	(14,926)
Finance income	6.2	(129)	(73)	(527)	(465)
Finance expense	5	46	2,626	31	1,456
Remeasurement of Contracts for Difference derivatives	10	-	4,610	-	5,875
Share of post-tax loss/(profits) of associates and joint ventures	14	-	(77)	-	(73)
Total net expenditure for the year from operations	-	8,905	15,581	7,781	(8,134)
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	-	-	(85)	-	-
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	8,905	15,666	7,781	(8,134)
Other comprehensive income and expenditure
Net (gain)/loss on: Revaluation of property, plant and equipment	-	-	(7)	-	(6)
Items that may be reclassified subsequently to net operating costs
Revaluation of investments	-	(67)	(95)	358	272
Actuarial (gains)/losses	-	-	-	-	(1)
Total other comprehensive net income and expenditure attributable to taxpayers	-	(67)	(102)	358	265
Comprehensive net (income)/expenditure for the year attributable to taxpayers	-	8,838	15,564	8,139	(7,869)

All operations are continuing.

The notes on pages 158 to 236 form part of these accounts.

Question 2

Consolidated Statement of Financial Position

Accepted Answer

as at 31 March 2025

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Revenue from contracts with customers	6.1	(70)	(4,863)	(72)	(4,096)
Other operating income	-	(1)	(29)	(13)	(39)
Total operating income	-	(71)	(4,892)	(85)	(4,135)
Staff costs	3	377	756	324	635
Purchase of goods and services	4.1	602	2,673	255	2,064
Depreciation and impairment charges	4.2	59	204	64	246
Provision and other liabilities expenses	4.3	(34)	6,474	91	(17,066)
Grants expenditure	4.4	8,055	3,287	7,628	3,337
Other operating expenditure	-	-	(7)	-	(7)
Total operating expenditure	-	9,059	13,387	8,362	(10,791)
Net operating expenditure	-	8,988	8,495	8,277	(14,926)
Finance income	6.2	(129)	(73)	(527)	(465)
Finance expense	5	46	2,626	31	1,456
Remeasurement of Contracts for Difference derivatives	10	-	4,610	-	5,875
Share of post-tax loss/(profits) of associates and joint ventures	14	-	(77)	-	(73)
Total net expenditure for the year from operations	-	8,905	15,581	7,781	(8,134)
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	-	-	(85)	-	-
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	8,905	15,666	7,781	(8,134)
Other comprehensive income and expenditure
Net (gain)/loss on: Revaluation of property, plant and equipment	-	-	(7)	-	(6)
Items that may be reclassified subsequently to net operating costs
Revaluation of investments	-	(67)	(95)	358	272
Actuarial (gains)/losses	-	-	-	-	(1)
Total other comprehensive net income and expenditure attributable to taxpayers	-	(67)	(102)	358	265
Comprehensive net (income)/expenditure for the year attributable to taxpayers	-	8,838	15,564	8,139	(7,869)

The notes on pages 158 to 236 form part of these accounts.

Jeremy Pocklington
Permanent Secretary and Principal Accounting Officer

5 September 2025

Question 3

Consolidated Statement of Cash Flows

Accepted Answer

for the year ended 31 March 2025

The Statement of Cash Flows shows the changes in cash and cash equivalents of the department during the reporting period. The statement shows how the department generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of service costs and the extent to which these operations are funded by way of income from the recipients of services provided by the department. Investing activities represent the extent to which cash inflows and outflows have been made for resources which are intended to contribute to the department’s future public service delivery.

	Note	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Cash flows from operating activities
Net operating cost	-	(8,905)	(15,666)	(7,781)	8,134
Depreciation, impairment and amortisation	4.2	58	204	64	246
Provision expense	4.3	(34)	6,474	91	(17,062)
Other operating expenditure	-	-	(6)	-	(5)
Finance income	6.2	(129)	(73)	(535)	(448)
Finance expense	5	46	2,626	31	1,456
Expense relating to Contracts for Difference derivatives	-	-	4,610	-	5,874
Share of post-tax profits of associates and joint ventures	-	-	(78)	-	(73)
Other non-cash items	-	(3)	(42)	(264)	(166)
(Increase)/decrease in inventories	-	-	2	-	(1)
(Increase)/decrease in trade and other receivables	15	183	(338)	2,288	2,415
Increase/(decrease) in trade payables and other liabilities	17	(349)	(78)	(2,395)	(1,260)
Less movements in payables relating to items not passing through the Consolidated Statement of Comprehensive Net Expenditure	-	38	24	(70)	(337)
Use of provisions	19	(258)	(4,047)	(3,571)	(7,839)
Movements in recoverable contract costs	-	-	(170)	-	-
Payments to retirement benefit obligations	20	-	(116)	-	(125)
Net cash outflow from operating activities	-	(9,352)	(6,674)	(12,142)	(9,191)
Cash flows from investing activities
Purchase of property, plant and equipment	7	(3)	(2,221)	(2)	(1,421)
Purchase of investment property	-	-	(25)	-	-
Purchase of intangible assets	9	(10)	(65)	(8)	(12)
Purchase of right-of-use assets	-	(12)	-	-	-
Lease liabilities	-	14	-	-	-
Investment in public sector shares	11	(2,679)	(697)	(1,089)	-
Investment in public sector loans	11	(50)	(5)	(14)	(14)
Public sector loans redemptions	11	2,907	2,907	331	331
Investment in private sector loans	-	(33)	-	-	-
Venture capital fund investments	-	12	(2)	(34)	(43)	(43)
Private sector loans redemptions	12	2	2	124	125
Dividends from joint ventures and associates	14	84	84	86	86
Income from financial assets
Payments to the Contracts for Difference generators	10	-	(2,198)	-	(1,865)
Net cash outflow from investing activities	-	244	(2,252)	(615)	(2,813)
Cash flows from financing activities
From Consolidated Fund (supply) – current year	-	8,840	8,840	12,831	12,831
Payment of lease liabilities	-	(14)	(33)	(18)	(26)
Grant in aid received from DESNZ	-	-	-	-	1
Net cash flow from financing activities	-	8,826	8,807	12,813	12,806
Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund	-	(282)	(119)	56	802
Receipts due to the Consolidated Fund which are outside the scope of the department’s activities	-	(720)	(720)	702	702
Payments of amounts due to the Consolidated Fund	-	682	696	(702)	(702)
Payments of amounts due to the Consolidated Fund for prior year	-	-	-	(130)	(148)
Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund	-	(320)	(143)	(74)	654
Cash and cash equivalents at the beginning of the period	16	1,025	2,737	1,098	2,083
Cash and cash equivalents opening balance	-	1,025	2,737	1,098	2,083
Cash and cash equivalents at the end of the period	-	16	705	2,594	1,024	2,737

The notes on notes on pages 158 to 236 form part of these accounts.

Question 4

Statement of Changes in Taxpayers’ Equity (core department)

Accepted Answer

for the year ended 31 March 2025

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Revenue from contracts with customers	6.1	(70)	(4,863)	(72)	(4,096)
Other operating income	-	(1)	(29)	(13)	(39)
Total operating income	-	(71)	(4,892)	(85)	(4,135)
Staff costs	3	377	756	324	635
Purchase of goods and services	4.1	602	2,673	255	2,064
Depreciation and impairment charges	4.2	59	204	64	246
Provision and other liabilities expenses	4.3	(34)	6,474	91	(17,066)
Grants expenditure	4.4	8,055	3,287	7,628	3,337
Other operating expenditure	-	-	(7)	-	(7)
Total operating expenditure	-	9,059	13,387	8,362	(10,791)
Net operating expenditure	-	8,988	8,495	8,277	(14,926)
Finance income	6.2	(129)	(73)	(527)	(465)
Finance expense	5	46	2,626	31	1,456
Remeasurement of Contracts for Difference derivatives	10	-	4,610	-	5,875
Share of post-tax loss/(profits) of associates and joint ventures	14	-	(77)	-	(73)
Total net expenditure for the year from operations	-	8,905	15,581	7,781	(8,134)
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	-	-	(85)	-	-
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	8,905	15,666	7,781	(8,134)
Other comprehensive income and expenditure
Net (gain)/loss on: Revaluation of property, plant and equipment	-	-	(7)	-	(6)
Items that may be reclassified subsequently to net operating costs
Revaluation of investments	-	(67)	(95)	358	272
Actuarial (gains)/losses	-	-	-	-	(1)
Total other comprehensive net income and expenditure attributable to taxpayers	-	(67)	(102)	358	265
Comprehensive net (income)/expenditure for the year attributable to taxpayers	-	8,838	15,564	8,139	(7,869)

Question 5

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Accepted Answer

for the year ended 31 March 2025

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Revenue from contracts with customers	6.1	(70)	(4,863)	(72)	(4,096)
Other operating income	-	(1)	(29)	(13)	(39)
Total operating income	-	(71)	(4,892)	(85)	(4,135)
Staff costs	3	377	756	324	635
Purchase of goods and services	4.1	602	2,673	255	2,064
Depreciation and impairment charges	4.2	59	204	64	246
Provision and other liabilities expenses	4.3	(34)	6,474	91	(17,066)
Grants expenditure	4.4	8,055	3,287	7,628	3,337
Other operating expenditure	-	-	(7)	-	(7)
Total operating expenditure	-	9,059	13,387	8,362	(10,791)
Net operating expenditure	-	8,988	8,495	8,277	(14,926)
Finance income	6.2	(129)	(73)	(527)	(465)
Finance expense	5	46	2,626	31	1,456
Remeasurement of Contracts for Difference derivatives	10	-	4,610	-	5,875
Share of post-tax loss/(profits) of associates and joint ventures	14	-	(77)	-	(73)
Total net expenditure for the year from operations	-	8,905	15,581	7,781	(8,134)
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	-	-	(85)	-	-
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	8,905	15,666	7,781	(8,134)
Other comprehensive income and expenditure
Net (gain)/loss on: Revaluation of property, plant and equipment	-	-	(7)	-	(6)
Items that may be reclassified subsequently to net operating costs
Revaluation of investments	-	(67)	(95)	358	272
Actuarial (gains)/losses	-	-	-	-	(1)
Total other comprehensive net income and expenditure attributable to taxpayers	-	(67)	(102)	358	265
Comprehensive net (income)/expenditure for the year attributable to taxpayers	-	8,838	15,564	8,139	(7,869)

The notes on notes on pages 158 to 236 form part of these accounts.

Question 6

Notes to the accounts

Accepted Answer

1. Accounting policies, judgements, and estimates

1.1 Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adapted and interpreted by the HM Treasury 2024-25 ‘Government Financial Reporting Manual (FReM)’, and as set out in the Accounts Direction to the department pursuant to section 5(2) of the Government Resources and Accounts Act 2000 (GRAA) except as described in section 1.2 below. Where the FReM permits a choice of accounting policy, the policy selected is that judged to be most appropriate to the circumstances of the core department and its consolidated entities (the departmental group) for the purpose of giving a true and fair view. The policies adopted by the departmental group as described below, have been applied consistently to items considered material to the accounts.

The Consolidated Statement of Financial Position (SoFP) shows significant net liabilities, primarily relating to Nuclear Decommissioning provision and Contracts for Difference derivatives which will be settled over many years. Any liabilities exceeding departmental group funding are expected to be met by future funding voted for by Parliament under Supply and Appropriation Acts (Main Estimates). There is no reason to believe the resources required to settle these liabilities will not be forthcoming. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements.

1.2 Accounting convention

These financial statements have been prepared on an accruals basis under the historical cost convention, modified by the revaluation of property, plant and equipment (except specific waste management assets), intangible assets, investment properties and some financial instruments, such as Contracts for Difference, to fair value to the extent required or permitted under IFRS as set out in these accounting policies.

Shares in consolidated bodies held by the core department are carried at historical cost less any impairment in accordance with the FReM.

The department has agreed with HM Treasury that specific nuclear waste management assets should be measured at historical cost less any impairment losses where there is no reliable and cost-effective valuation methodology. This is a departure from the FReM requirement to report property, plant, and equipment at fair value.

1.3 Presentational currency

The financial statements are presented in pounds sterling, the functional currency of the departmental group. Transactions denominated in a foreign currency are translated into sterling at the rate of exchange on the date of each transaction. In preparing the financial statements, monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing at the reporting date. All translation differences of monetary assets and liabilities are included in net expenditure for the year. Values are rounded to the nearest million pounds (£m) unless the FReM requires a lower threshold.

1.4 Basis of consolidation

The departmental group accounts consolidate the balances of the core department, designated bodies and entities consolidated voluntarily in line with HM Treasury’s accounts direction, as listed in note 26, which fall within the departmental boundary as defined in the FReM and make up the departmental group, excluding transactions and balances between them. Where HMT classifies an entity retrospectively such that the entity should have been designated for consolidation in a prior period, the accounts are voluntarily restated to reflect the position from the effective date of classification. The consolidated entities prepare accounts in accordance with either the FReM, or the Companies Act 2006 (for limited companies such as LCCC). For those entities that do not prepare accounts in accordance with the FReM, adjustments are made upon consolidation, if necessary, where differences could have a significant effect on the accounts. The core department and its designated bodies are all domiciled in the UK.

1.5 Changes in accounting policies

Following the addition of a new entity-Net Zero North Sea Storage Ltd (NZNSSL) to the departmental boundary and adoption of the new funding business models during the financial year, the accounting policies have been updated to reflect changes in consolidation, boundary assessment, recognition and measurement of related financial instruments. See note 1.22.

1.6 Applicable accounting standards issued but not yet adopted

The department will apply the new and any revised accounting standards once they have been adopted by the public sector as set out in the FReM.

IFRS 17 Insurance Contracts

IFRS 17 Insurance Contracts replaced IFRS 4 Insurance Contracts and was generally effective for reporting periods beginning on or after 1 January 2023. Government departments will apply IFRS 17, as adapted and interpreted by FReM, for the first time in the financial year commencing 1 April 2025 with a transition date of 1 April 2024 for comparative periods.

To assess the impact of the standard, the department has carried out an assessment of actual income and expenditure streams, and contingent liabilities that potentially have underlying agreements that fall within the scope of IFRS 17 between the transition date of 1 April 2024 and 31 March 2025.

The department is currently unable to disclose reasonably estimable quantitative information regarding the impact on the annual financial statements of implementing IFRS 17.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 Presentation and Disclosure of Financial Statements was issued in April 2024 and applies to reporting periods beginning on or after 1 January 2027 (subject to UK and Financial Reporting Advisory Board (FRAB) endorsement). The department does not intend to early adopt this standard.

IFRS 19 Subsidiaries without Public Accountability: Disclosures

IFRS 19 Subsidiaries without Public Accountability: Disclosures was issued in May 2024 and applies to reporting periods beginning on or after 1 January 2027 (subject to FRAB endorsement). The department does not intend to early adopt this standard.

Non-investment asset valuations

In December 2023 HM Treasury released an exposure draft on potential changes to valuing and accounting for non-investment assets.

The following changes to the valuation and accounting of non-investment assets is to be included in the 2025-26 FReM for mandatory implementation:

References to assets being held for their ‘service potential’ and the terms ‘specialised/ non-specialised’ assets will be removed from the FReM. Non-investment assets will instead be described as assets held for their ‘operational capacity’. This change has no impact on the valuation basis of non‑investment assets, which remains Existing Use Value (EUV).

An adaptation to IAS 16 will be introduced to withdraw the requirement to revalue an asset where its fair value materially differs from its carrying value. Assets are now valued using one of the following processes:

A quinquennial revaluation supplemented by annual indexation
A rolling programme of valuations over a 5-year cycle, with annual indexation applied to assets during the 4 intervening years
For non-property assets only, appropriate indices
In rare circumstances where an index is not available, a quinquennial revaluation supplemented by a desktop revaluation in year 3

The option to measure intangible assets using the revaluation model is withdrawn. The carrying values of intangible assets at 31 March 2025 will be considered the historical cost at 1 April 2025.

1.7 Operating income

Operating income relates directly to the operating activities of the departmental group and includes income from contracts with customers, levies and grants and income from coal pension schemes.

The departmental group is required to identify receipts which it collects on behalf of the Consolidated Fund; these are not recognised as income but instead are disclosed in a separate Trust statement published alongside these accounts and in note 4 in the Statement of Outturn against Parliamentary Supply (SOPS) in the accountability report.

Operating income from contracts with customers

Income from contracts with customers is allocated to individual promises, or performance obligations, on a stand-alone selling price basis, and is recognised when the related performance obligation is satisfied, either over time or at a point in time.

The performance obligations are typically satisfied upon delivery of goods and services in accordance with the contractually defined timescales. The payment terms for the invoices are typically 30 days. Where the departmental group receives consideration prior to the transfer of goods and services, the amounts are recorded as contract liabilities. Where the departmental group has transferred goods and services to a customer and the right to consideration is conditioned on something other than the passage of time, the amounts are recorded as contract assets.

The measurement of income takes account of significant financing components, variable consideration, and any discounts or rebates.

Levies

Under statute or Treasury consent, an entity is permitted to retain the revenue collected from taxation, fines, and penalties. This revenue is treated as arising from a contract and accounted for under IFRS 15.

Levy income is recognised in the departmental group accounts when an event has occurred that creates an obligation on a counterparty to pay the levy, the amount can be reliably measured, and it is probable that economic benefits from the taxable event will flow to the departmental group. Levies are typically set on an annual basis, invoiced monthly, quarterly, or bi-annually, and accounted for in the period to which the invoices are related and performance obligations are satisfied.

The Low Carbon Contracts Company Ltd (LCCC) and Electricity Supply Company Ltd (ESC) are permitted to retain levies collected under statute and classified as taxes in the national accounts. This income is recognised by LCCC and ESC in the same period as the related expenditure. LCCC and ESC do not prepare their individual accounts under FReM and have judged that IFRS 15 ‘Revenue from Contracts with Customers’ does not apply to income from electricity suppliers. IFRS 15 is applicable to the departmental group’s remaining levy income under FReM guidance.

The departmental group is not permitted by the FReM to recognise tax income relating to future years, whereas LCCC which does not apply the FReM, is able to. Adjustments are made on consolidation to ensure compliance with the departmental group accounting policy.

Grant income

Grant income can only be recognised by the department when there is reasonable assurance that there are no conditions attached, or that any such conditions have been complied with and there is reasonable assurance the grant will be received.

Under the FReM, grants and grants-in-aid should be accounted for in accordance with IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ as interpreted by the FReM.

Income from the Mineworkers’ Pension Scheme

Income arising from the government guarantee of certain benefits payable to members and beneficiaries of the Mineworkers’ Pension Scheme is recognised when the core department becomes entitled to the income and the value can be reliably measured.

1.8 Staff costs

Staff costs are recognised as expenses when the departmental group becomes obligated to pay them, including the cost of any untaken leave entitlement.

1.9 Grants payable

Grants payable are recognised when the grant recipient has performed the activity that creates an entitlement to the grant under the terms of the scheme and include estimates for claims not yet received. Where an intermediary acts as agent in distributing grant on behalf of the department, grants payable are recognised when the grant recipient becomes entitled to the grant.

A promissory note is a legally binding undertaking by the government to provide to the named beneficiary any amount up to the specified limit that the beneficiary may demand, at any time. They have been classified as financial liabilities measured at amortised cost and have been shown as due within 1 year, as they are legally payable on demand, so the maturity profile in the Consolidated Statement of Financial Position, and in note 17, shows the earliest date at which they could be payable.

Grant contributions to international organisations in the form of promissory notes are recognised as expenses when they become payable on demand with the department exercising no further control over disbursement. The only exception to this treatment is where promissory notes are used for investing in a fund. In this scenario, a financial asset is created at the point of a note being encashed.

1.10 Taxation

The core department is exempt from corporation tax by way of Crown exemption. Some consolidated bodies are subject to corporation tax on taxable profits. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to HM Revenue and Customs, based on tax rates and laws that are enacted or substantively enacted by the reporting date.

Value-added tax (VAT) is accounted for in the accounts, in that the amounts are shown net of VAT except for irrecoverable VAT, which is aggregated with the cost of purchased items. Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all tax-deductible temporary differences, carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available in future years against which they can be utilised.

1.11 Property, plant, and equipment (PPE)

Assets are capitalised as PPE if they are intended for use on a continuous basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group. Exceptions are:
1. a. assets held by the NDA on designated nuclear sites are only recognised where the economic element of their value at the reporting date exceeds £100,000 and the proportion of asset value relating to commercial activity exceeds 10%. ‘Commercial activity’ refers to work performed for third-party customers, not activities related to fulfilling decommissioning obligations.
2. b. operational mine water schemes and subsidence pumping stations are held by the Mining Remediation Authority at £nil value because they are used to address pollution caused by past mining activities where the economic benefits have already been received.
The estimated cost of decommissioning facilities is recognised as part of the carrying value of the asset at initial recognition and depreciated over its useful life to the extent that it has been recognised as a provision under IAS 37.

Valuation of PPE

PPE is carried at fair value except for nuclear waste management assets held at historical cost (see note 7) and assets under construction which are held at cost. In accordance with the FReM, assets that have short useful lives or are of low value are carried at depreciated historical cost less impairment as a proxy for fair value.

Non-specialist land and buildings are measured at current value in existing use using professional valuations. Specialist land and buildings are measured at depreciated replacement cost which represents the fair value of a replacement asset in a similar condition.

Revaluation of PPE

Any accumulated depreciation at the date of revaluation is eliminated and the resulting net book value restated to equal the revalued amount. Any revaluation increase arising is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is credited to net expenditure for the year to the extent of the decrease previously charged. A decrease in carrying amount arising on revaluation is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. On de-recognition, any revaluation surplus remaining in the revaluation reserve attributable to the asset is transferred directly to the general fund.

Depreciation of PPE

PPE assets are depreciated to estimated residual values. This is done on a straight-line basis over their estimated useful lives, given in the table below. Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date. Freehold and long leasehold land are not depreciated.

PPE	Estimated Useful Economic Life in years
Freehold buildings	10 – 60
Leasehold improvements	Shorter of remaining useful life or outstanding term of lease
Computer equipment	2 – 10
Office machinery (included in plant and machinery), furniture, fixtures, and fittings	2 – 11
Agricultural buildings	Up to 60
Dwellings	Up to 60
Transport equipment	2 – 14
Plant and machinery	3 – 50
Assets under construction	Not depreciated until available for use

1.12 Investment property

The departmental group holds properties which have been classified as investment properties and are measured using the fair value model specified in IAS 40. Gains and losses arising from changes in fair value are recognised in net expenditure for the year.

1.13 Intangible non-current assets

Intangible non-current assets are capitalised if they are intended for use on a continuing basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group. There are no active markets for most the departmental group’s intangible non-current assets which are valued at the lower of depreciated replacement cost and value in use using a valuation technique (for example for incomegenerating assets); where there is no value in use, depreciated replacement cost is used. Where there is an active market, the valuation is derived from the active market. Assets of low value or with short useful lives are carried at cost less accumulated amortisation and impairment losses as a proxy for fair value. They are amortised on a straight-line basis over the following periods:

Intangible assets	Period
Software licences	3 – 10 years
Internally developed software	Up to 10 years
Website development costs	2 – 5 years
Patents, licences, and royalties	7 – 15 years

1.14 Impairment of PPE and intangible non-current assets

The departmental group reviews carrying amounts at each reporting date. If an indicator for impairment occurs, then the recoverable amount of the asset (the higher of fair value less costs to sell and value in use) is estimated and an impairment loss recognised to the extent that it is lower than the carrying amount. Losses arising from a clear consumption of economic benefit are charged to net expenditure for the year. Losses that do not result from a loss of economic value or service potential are taken to the revaluation reserve to the extent that a revaluation reserve exists for the impaired asset, otherwise to net expenditure for the year.

1.15 Cash and cash equivalents

Cash and cash equivalents include cash in hand and short-term investments with a maturity of 3 months or less, which are easily convertible to cash with minimal risk of value changes. Bank overdrafts are listed under trade payables and other liabilities.

1.16 Leases

Assumptions:

The definition of a contract is expanded to include intra-UK government agreements where non-performance may not be enforceable by law. This includes, for example, Memorandum of Understanding (MoU) agreements.

The group has expanded the definition of a lease to include arrangements with £nil or significantly below market value consideration. Peppercorn leases are examples of these, and are defined by HM Treasury as lease payments significantly below market value. These assets are fair valued at initial recognition. On transition, any differences between the discounted lease liability and the right-of-use asset are included in equity. Any differences between the lease liability and right-of-use asset for new leases after this are recorded in income.

As per the FReM guidelines, the group does not recognise right-of-use assets and lease liabilities for:

Low-value assets (aligned with the departmental group’s £10,000 capitalisation threshold)
Leases with terms of 12 months or less

Measurement of right-of-use assets:

Initial measurement: At the commencement date, the departmental group measures the right-of-use asset at cost, which comprises:

The amount of the initial measurement of the lease liability
Any lease payments made at or before the commencement date less any lease incentives received
Any initial direct costs incurred
An estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lease terms and conditions

Subsequent measurement: The cost model for IFRS 16 is used as a proxy for valuation except where:

A longer-term contract that has no provisions to assess lease payments for market conditions
There is a significant period between these assessments
The valuation of the underlying asset is likely to fluctuate significantly due to changes in market prices

Depreciation of right-of-use assets: Right-of-use assets are depreciated on a straight-line basis from commencement date to the earlier of the end of:

Useful life of the right-of-use asset, assessed as the same as the class of P P E asset to which the lease relates
Lease term

Impairment of right-of-use assets: The departmental group applies I A S 36 ‘Impairment of Assets’ to determine whether a right-of-use asset is impaired and to account for any impairment loss identified.

Measurement of lease liabilities:

Initial measurement: At the commencement date, the departmental group measures the lease liability at the present value of the lease payments that are not paid at that date. Lease payments are discounted using either:

The interest rate implicit in the lease
HM Treasury discount rate where interest rates implicit in the lease cannot be readily determined
Another discount rate where the departmental group determines it more accurately represents the interest rate

The weighted average discount rate applied to the lease liabilities is 3.57%. Most of the departmental group entities have applied the HM Treasury discount rate prevailing at the time of adoption as shown in the table below:

Period	HM Treasury discount rate
1 January 2023 to 31 December 2023	3.51%
1 January 2024 to 31 December 2024	4.72%
1 January 2025 to 31 December 2025	4.81%

At the commencement date, lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the term not paid at the commencement date:

Fixed payments, including any in-substance fixed payments less any lease incentives receivable
Variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date, for example, payments linked to a consumer price index or a benchmark interest rate
Amount expected to be payable by the departmental group under residual value guarantees
The exercise price of a purchase option if the departmental group is reasonably certain to exercise that option
Payments of penalties for terminating the lease if the lease term reflects the departmental group exercising the option to terminate the lease and the departmental group is reasonably certain to exercise this option.

Subsequent measurement: The lease liability is remeasured to reflect changes to the lease payments. The departmental group remeasures the lease liability by discounting the revised lease payments using a revised discount rate if there is a change in:

Lease term
The departmental group’s assessment of an option to purchase the underlying asset, assessed considering events and circumstances in the context of a purchase option. The departmental group determines the revised lease payments to reflect the change in amounts payable under the purchase option.
Amount expected to be payable under a residual value guarantee
Future lease payments resulting from a change in the index or rate used to determine these future lease payments, including a change to reflect changes in market rental rates following a market rent review. The departmental group remeasures the lease liability to reflect those revised lease payments only when there is a change in the cash flows (this will be when the adjustment to the lease payments takes effect)

The amount of remeasurement of the lease liability is recognised as an adjustment to the right-of-use asset, where there is a balance on the right-of-use asset. However, if the carrying amount of the right-of-use asset is £nil and there is a further reduction in the measurement of the lease liability, the departmental group recognises the remaining amount of the remeasurement of the lease liability in the Statement of Comprehensive Net Expenditure.

Classification: The departmental group classifies leases where it is lessor, as either an operating lease or a finance lease. The departmental group classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. If it does not, then the lease is classified as an operating lease.

Finance leases: recognition and measurement: At the commencement date, the departmental group recognises assets held under a finance lease within the Statement of Financial Position and presents them as a receivable at an amount equal to the net investment in the lease using the interest rate implicit in the lease to measure the net investment in the lease. Initial direct costs are included in the net investment in the lease. Finance lease income is allocated over the lease term to reflect a constant periodic rate of return on the departmental group’s net investment outstanding in respect of the leases.

Operating leases: recognition and measurement: The departmental group recognises lease payments from operating leases as income on a straight-line basis. The departmental group recognises costs, including depreciation incurred in earning the lease income, as expense. Initial direct costs incurred in obtaining the operating lease are added to the carrying amount of the underlying asset and these are expensed over the lease term on the same straight-line basis as the lease income.

1.17 Subsidiaries, associates, and joint ventures

Subsidiaries and public sector joint ventures are consolidated where designated within the departmental group boundary (note 26); those subsidiaries, joint ventures and associates that are outside of the departmental group boundary are measured in accordance with IFRS 9 ‘Financial Instruments’ or IAS 28 ‘Investments in Associates and Joint Ventures’ as relevant. The financial asset is recognised when the departmental group becomes party to the contractual provisions of the instrument. Equity investments in associates or joint ventures outside the public sector are initially recorded at cost and subsequently adjusted to reflect the departmental group’s share of net profit or loss of the associate or joint venture.

1.18 Financial instruments

Financial assets and liabilities are measured initially at fair value plus transaction costs unless measured at fair value through profit or loss in which case transaction costs are charged to net expenditure for the year. Fair value is determined by reference to quoted prices where an active market exists for the instrument; otherwise, it is determined using generally accepted valuation techniques including discounted estimated cash flows. A regular purchase or sale of financial assets shall be recognised and derecognised, as applicable, using settlement date accounting.

Financial assets:

Classification and measurement of financial assets: The classification of financial assets under IFRS 9 is based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in scope of the standard are never separated. Instead, the hybrid financial instrument is assessed for classification.

Under IFRS 9, the requirement for classifying and measuring financial assets is that:

Loans and other debt instruments are classified as either amortised cost, FVTOCI (fair value through other comprehensive income) or FVTPL (fair value through profit or loss), depending on the business model and cash flow characteristics of the financial assets
Investments in equity instruments are classified as FVTPL, unless an irrevocable election is made on initial recognition to recognise subsequent changes in fair value in Other Comprehensive Income (OCI) – the election is only available to equity instruments that are not held for trading
Derivatives are classified as FVTPL

Categories of financial assets: Financial assets are categorised as one of the following:

Amortised cost are financial assets whose contractual cash flows are solely payments of principal and interest, and the objective of the business model is to hold financial assets to collect contractual cash flows only. They are initially recognised at fair value and thereafter at amortised cost using the effective interest method less any impairment – the effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period
Fair Value Through Other Comprehensive Income (FVTOCI) are either:
- Debt instruments whose cash flows are solely payments of principal and interest and the business model of which is to hold for both collecting contractual cash flows and selling
- Equity instruments that are neither held for trading nor contingent consideration recognised in a business combination, as the departmental group has made an irrevocable election at initial recognition

After initial recognition, these assets are subsequently measured at fair value. Gains and losses in fair value are recognised directly in equity. On de-recognition, the cumulative gain or loss previously recognised in equity is recognised in net expenditure for the year for debt instruments and transferred to general fund for equity instruments.

All financial assets which do not meet the criteria for classification to be recognised and measured at amortised cost and FVTOCI are recognised and measured at fair value through profit or loss (FVTPL). Transaction costs and any subsequent movements in the valuation of the asset are recognised in net expenditure for the year

Impairment of financial assets: Financial assets other than equity instruments and those at FVTPL are assessed for impairment at each reporting date using the expected credit loss (ECL) model. The 3-stage model based on the level of credit risk is applied to any financial assets other than long-term trade receivables, contract assets which do contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’ as follows:

For financial assets with low credit risk or assets that have not had a significant increase in credit risk since initial recognition, 12-month ECL are recognised, and interest revenue is calculated on the gross carrying amount of the asset without the reduction of credit allowance
For financial assets that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment, lifetime ECL is recognised, and interest revenue is calculated on the gross carrying amount of the asset
For financial assets that have objective evidence of impairment at the reporting date, lifetime ECL is recognised, and interest revenue is calculated on the net carrying amount net of credit allowance

For impairment gains or losses, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised in accordance with the standard, is recognised in profit or loss.

For long-term trade receivables, contract assets which do not contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’, the simplified approach is applied and lifetime ECL are recognised as dictated by the FReM.

The impairment methodology is detailed in the financial instruments note 22.

Derecognition of financial assets: Financial assets are derecognised when the rights to receive future cash flows have expired or are transferred and the risks and rewards of ownership have been substantially transferred.

Financial liabilities:

Classification and measurement of financial liabilities: The departmental group’s financial liabilities excluding derivatives and some financial guarantees are initially recognised at fair value including directly attributable transaction costs; they are subsequently measured at amortised cost using the effective interest rate method, except for:

Financial liabilities at FVTPL, which is applied to derivatives and other financial liabilities designated as such at initial recognition
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial liability is recognised for the consideration received for the transfer
Financial guarantee contracts and loan commitments

Derecognition of financial liabilities: Financial liabilities are derecognised when the obligation is discharged, cancelled, or expires.

Derivative financial instruments: Derivatives are initially recognised, and subsequently measured, at fair value. Gains and losses in fair value are recognised in net expenditure for the year unless hedge accounting is applied.

The departmental group has 2 classes of derivative financial instruments, foreign exchange contracts to which hedge accounting is applied and Contracts for Difference (CfDs) contracts to which hedge accounting is not applied.

Contracts for Difference (CfDs) note 10: CfDs are held to incentivise investment in low carbon electricity generation by agreeing strike prices with electricity generators which are counterparties to the contracts. The counterparty pays, or is paid, the difference between the strike price and the reference price (a measure of the average market price of electricity) at the time of electricity supply. CfDs are measured at FVTPL, initially at their transaction price (£nil) with subsequent changes in fair value (as measured by a valuation model) recognised in net expenditure for the year.

Low Carbon Hydrogen Agreements (LCHA) note 10: The difference amount is calculated as follows: LCCC makes a payment when the strike price for the qualifying volumes is higher than the reference price. On the other hand, the LCHA Counterparty makes a payment when the reference price for the qualifying volumes exceeds the strike price.

This arrangement is recognised as a derivative like CfDs and valued in accordance with IFRS 9 requirements as adapted by the FReM guidelines.

1.19 Pensions

The accounting for each of the departmental group’s pension plans is dependent on its nature.

Funded defined-benefit pension schemes:

The departmental group has 8 funded defined-benefit pension schemes, 2 schemes through the Nuclear Decommissioning Authority (NDA) and 6 schemes through the nuclear site licence companies.

The net assets/liabilities recognised in the SoFP for funded defined benefit schemes are calculated by independent actuaries by deducting the fair value of scheme assets (at market prices based on available market comparables) from the present value of defined benefit obligations (estimated using the projected unit credit method, less any amounts receivable from third parties). Where the scheme is in surplus, the asset recognised in these statements is limited to the present value of benefits available from future refunds from the plan, reductions in future contributions to the plan or on settlement of the plan and considers the adverse effect of any minimum funding requirements. Actuarial gains and losses are recognised as other comprehensive net income and expenditure except for site licence companies where they are included in provision expense relating to the nuclear decommissioning provision.

Unfunded defined benefit pension schemes:

The departmental group contributes towards several unfunded defined benefit pension schemes of which employees are members: these include the Principal Civil Service Pension Scheme (PCSPS), the Civil Servant and Other Pension Scheme (CSOPS) and the United Kingdom Atomic Energy Authority (UKAEA) combined pension scheme. The participating employers in these schemes are unable to identify their share of the underlying net liability; as such these schemes are accounted for as defined contribution pension schemes, with employers’ contributions charged to the SoCNE in the period to which they relate. Further information regarding PCSPS and CSOPS is presented in the staff report.

Defined contribution pension schemes:

Contributions are charged to the SoCNE when they become payable. The departmental group has no further liabilities in respect of benefits to be paid to members.

More information about the departmental group’s pension schemes can be found in the accounts of the consolidated entities, the DESNZ staff report, and the pension scheme accounts.

1.20 Provisions

A provision is recognised when it is probable that an outflow of economic benefits will be required to settle a present obligation (legal or constructive) that can be reliably measured, and which results from a past event. Where the time value of money is material, the provision is measured at present value using discount rates prescribed by H M Treasury. H M Treasury issues nominal rates that do not take inflation into account, unlike real rates. Using these nominal rates, the cash flows are inflated using the following inflation rates provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions.

	31 March 2025 Nominal discount rate	31 March 2025 Inflation rate	31 March 2025 Equivalent real discount rate	31 March 2024 Nominal discount rate	31 March 2024 Inflation rate	31 March 2024 Equivalent real discount rate
Cash outflows expected within 2 years	4.03%	2.60%	1.39%	4.26%	3.60%	0.64%
Cash outflows expected between 2 – 5 years	4.07%	2.30%	1.73%	4.03%	1.80%	2.19%
Cash outflows expected between 5 - 10 years	4.81%	2.30%	2.45%	4.72%	1.80%	2.87%
Cash outflows expected after 10 years	4.55%	2.00%	2.50%	4.40%	2.00%	2.35%

Nuclear decommissioning provisions:

Where expenditure in settlement of a provision is expected to be recovered from a third party, the recoverable amount is treated as a separate asset (note 19.1). Provision charges in the SoCNE are shown net of changes in these recoverable amounts.

1.21 Contingent assets and liabilities

Contingent liabilities:

Where an outflow of economic benefits from a past event is possible but not probable, the departmental group discloses a contingent liability. In addition to contingent liabilities disclosed in these financial statements in accordance with I A S 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote are disclosed in the accountability report for parliamentary reporting and accountability purposes. Remote contingent liabilities reported in the accountability report are stated at the amounts reported to Parliament.

Contingent assets:

Where an inflow of economic benefits from a past event is probable, the departmental group discloses a contingent asset.

Estimates of the financial effects are disclosed where practicable; where the time value of money is material, contingent liabilities and assets are stated at discounted amounts and the amount reported to Parliament separately noted.

1.22 Judgements, estimates and assumptions

Preparation of financial statements requires management to make judgements, estimates and assumptions based on experience and expected events that affect the reported amounts of assets and liabilities, income and expenditure. In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, revisions to accounting estimates are recognised prospectively. Revisions of the estimates and assumptions below could cause material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Key accounting judgements and estimates applied in these statements are described below:

Funding to Bulb Energy Ltd (in special administration) (note 11.2): The core department has provided funding to Bulb Energy Ltd (Bulb). Following ONS classification of Bulb to central U K government, the department recognises all identifiable assets and liabilities of Bulb in the core department’s financial statements in line with IFRS 3.

Carbon Capture, Usage and Storage (CCUS) – Transport & Storage Company (T&SCo) – Net Zero North Sea Storage Ltd (NZNSSL): During the financial year, the Office for National Statistics (ONS) issued a provisional decision to classify T&SCo within the central government subsector as a non-market producer under public sector control. H M Treasury provided an accounts direction to support the department’s voluntary consolidation of the entity, as it had not been included in the Amendment Order. In accordance with the FReM, Net Zero North Sea Storage Ltd was consolidated into the DESNZ Group accounts recognising assets, liabilities, equity, income, expenses, and cash flows of T&SCo on a line-by-line basis.

Fair value measurement of Hinkley Point C CfD: Significant judgements in relation to the fair value measurement of Hinkley Point C CfD are set out in note 10 Derivative financial instruments.

CfD contracts: The significant uncertainties affecting measurement of Financial Investment Decision Enabling for Renewables (FIDeR) and CfD contracts, which facilitate investment in low-carbon electricity generation, are described in note 10.

Low Carbon Hydrogen Agreements (LCHA) note 10: The difference amount is calculated as follows: LCCC makes a payment when the strike price for the qualifying volumes is higher than the reference price. On the other hand, the LCHA Counterparty makes a payment when the reference price for the qualifying volumes exceeds the strike price.

This arrangement is recognised as a derivative like CfDs and valued in accordance with IFRS 9 requirements as adapted by the FReM guidelines.

Income recognition (note 6): Several significant accounting judgements have been performed to apply IFRS 15 to the recognition of revenue and costs from contracts with customers held by the NDA, including the determination of transaction price of each contract, the allocation of transaction price to each performance obligation, the timing of satisfaction of performance obligations, and the accounting treatment of contract costs. Details are included in the NDA’s financial statements.

Useful economic lives of non-current assets: There is uncertainty in relation to estimated useful economic lives of non-current assets; these are reviewed as at the reporting date and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence or legal or other limits on their use.

Impairment of assets (note 4.2): Impairment of non-financial assets is measured by comparing the carrying value of the asset or cash generating unit with management’s estimate of its recoverable amount. Impairment of financial assets is measured using the expected credit loss model.

Provisions (note 4.3): Provision discount rates set by HM Treasury are updated annually and have a material effect on liabilities. There are other significant uncertainties in relation to measurement of the liabilities reported in note 4.3, in relation to future decommissioning costs to be incurred by the NDA, UKAEA and Mining Remediation Authority, which are described in that note.

Non-Domestic Renewable Heat Incentives Scheme Accruals: The best estimate of Non-Domestic Renewable Heat Incentives (NDRHI) accrual is based on a modelling framework. The framework uses several assumptions to estimate spend where actual data is not available. There is a risk that the reality diverges from modelled estimates due to the model not accurately reflecting reality. This risk is considered to be low as most of the known uncertainties have been identified and assessed using statistical or scenario analysis. However, there may be some unknown factors that mean our model systematically over or underestimate spend. Modelling specification uncertainty is mitigated by periodically reviewing performance of past estimates against actual outcomes.

2. Reporting by operating segment

In accordance with the relevant reporting requirements, including IFRS 8 ‘Operating Segments’, the Statement of Outturn against Parliamentary Supply (SOPS) and supporting notes reflect net resource and capital outturn in line with the control totals voted by Parliament. The figures within SOPS 1.1 provide the income and expenditure totals associated with key business activities within the departmental group and therefore broadly reflect the management information reporting to the board during the period.

3. Staff costs

	Permanently employed staff £m	Others £m	2024‑25 Total £m	2023‑24 Total £m
Wages and salaries	501	74	575	490
Social security costs	58	10	68	51
Other pension costs	115	-	115	96
Sub total	674	84	758	637
Less recoveries in respect of outward secondments	(2)	-	(2)	(2)
Total net costs	672	84	756	635
Of which: Core department	355	22	377	324
Of which: NDPBs and other designated bodies	317	62	379	311
Total net costs	672	84	756	635

Further detailed information on staff costs can be found in the staff report and remuneration report. The staff report also includes staff costs for nuclear site licence companies (SLCs). SLCs staff costs are not included here as they are included in the amount shown for utilisation in the NDA’s nuclear decommissioning provision in note 19.

4. Operating expenditure

4.1 Purchase of goods and services

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Rentals under operating leases	-	-	(2)	(1)
Accommodation and office equipment costs	44	153	42	164
Legal, professional and consultancy costs	198	237	177	226
Finance, HR, IT and support costs	39	94	45	79
Training and other staff costs	6	17	6	15
Travel and subsistence costs	8	23	5	17
Advertising and publicity	5	7	11	13
Programme management and administration of grants and awards	93	271	73	318
Capacity Market payments	-	1,246	-	1,024
Professional and international subscriptions	27	29	30	32
Enforcement costs of employment related policies	-	-	(1)	(1)
Purchase of geographical and scientific equipment	-	59	-	26
Payment of taxes and levies	1	5	8	2
Energy intensive industries and other subsidies	-	-	(266)	(266)
Sponsorship costs	-	-	(1)	(1)
Other purchase of goods and services cost	37	387	6	286
Research and development	144	146	122	131
Total	602	2,673	255	2,064

Core department:

Energy intensive industries and other subsidies:The prior year figure of (£266m) was driven by a prior year adjustment made in relation to Bulb in the 2023-24 accounts, with further details on that adjustment set out in the same note in those accounts.

Departmental group: Capacity Market (CM) payments of £1,246m were recognised as at 31 March 2025 (31 March 2024: £1,024m). These CM payments ensure there is enough electricity generation capacity to meet demand in Great Britain. As a result, the capacity providers commit to making their capacity available during times of peak demand. In addition, purchase of geographical and scientific equipment increased from £26m in 2023-24 to £59m in 2024-25.

Audit fees: Audit fees are included under the heading ‘Legal, professional and consultancy costs’.

	2024‑25 Core department £m	2024‑25 Consolidated ALBs £m	2023‑24 Core department £m	2023‑24 Consolidated ALBs £m
Core department	805,000	2,226,567	825,000	1,623,469
UKAEA pension scheme accounts	52,371	-	50,685	-
Trust statement	21,000	-	20,000	-
Nuclear Decommissioning funding accounts	5,000	-	5,000	-
Total NAO audit services	883,371	2,226,567	900,685	1,623,469
NAO non-audit services
Non-NAO audit services	-	518,250	-	548,250
Non-NAO non-audit services	-	1,000	-	750
Total audit services	883,371	2,745,817	900,685	2,172,469

4.2 Depreciation and impairment charges

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Amortisation of recoverable contract costs	-	118	-	116
Depreciation	15	64	52	97
Amortisation	5	8	5	7
Impairment of property, plant and equipment	-	14	-	19
Impairment of investments and remeasurement of expected credit losses	38	1	7	7
Total	59	204	64	246

4.3 Provisions and other liability expenses

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Increase/(decrease) in nuclear provisions due to changes in discount rate	(2)	1,317	(64)	(25,921)
Increase/(decrease) in other provisions due to changes in discount rate	(2)	(39)	(45)	(920)
Increase/(decrease) in nuclear provisions due to other movements	77	5,319	104	9,449
Increase/(decrease) in other provisions due to other movements	(107)	(123)	96	326
Total increase/(decrease) in provisions	(34)	6,474	91	(17,066)

The change in the provision expenses was driven both by the increase in nuclear provisions (£5.3bn) as well as the change in provision discount rates. The real discount rate for cash outflows expected after 10 years, prescribed by HM Treasury, decreased from 2.45% at 31 March 2024 to 2.40% at 31 March 2025. The change in discount rate has the impact of increasing the expected future costs of settling the department’s nuclear liabilities; the actual costs of settling the liabilities could be different.

In addition, the following other major changes applied in the reporting period 2024-25:

a further change in the forecast of efficiency savings at Sellafield, following the initial review in the previous year
reviews of the costs of major projects at Sellafield
incorporation of revised cost estimates for the management of plutonium, reflecting the recent policy announcement made by HM Government

Further detail of the movements in the nuclear decommissioning provision can be found in note 19.1 Nuclear provisions.

The increase/(decrease) in other provisions due to changes in discount rate is also primarily driven by changes in the discount rate for the Mining Remediation Authority’s provisions.

Further detail of movements in other provisions can be found in note 19.2 Other provisions.

4.4 Grants expenditure

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Grant in Aid	4,774	-	4,306	-
Boiler Upgrade Scheme	190	190	89	89
Energy Bills Discount Scheme	-	-	241	241
Energy Bills Relief Scheme	40	40	29	29
Energy Bills Support Scheme	(1)	(1)	(98)	(98)
Energy Price Guarantee (EPG)	(51)	(51)	589	589
Future Nuclear Enabling Fund	49	49	7	7
Green Homes Grant	(9)	(9)	(30)	(30)
Heat Decarbonisation Technologies	158	158	98	98
Home Upgrade Grant scheme	155	155	(96)	(96)
Industrial Decarbonisation	60	60	18	18
International Climate Finance	367	367	316	316
Local Net Zero Hubs	16	16	32	32
Net Zero Hydrogen	20	20	2	2
Net Zero Innovation	155	155	164	164
Nuclear Fuel Fund	26	26	5	5
Other Grants	45	52	90	105
Public Sector Decarbonisation Scheme	362	362	395	395
Renewable Heat Incentive	1,209	1,209	1,218	1,218
Social Housing Decarbonisation Fund	453	453	227	227
UK National Nuclear Laboratory Facilities	38	38	26	26
Total	8,055	3,287	7,628	3,337

Core department:

Energy Price Guarantee: The credit of £51m under the Energy Price Guarantee in 2024-25 relates to cash inflows driven by end of scheme reconciliations (2023-24: £589m debit).

Home Upgrade Grant Schemes: Home Upgrade Grant spend totalled £155m in 2024-25. The credit of £96m in 2023-24 related to clawbacks, which arose due to these being Section 31 grants which were paid out in full and then upon final delivery details being confirmed, any unspent funds were returned to the department.

Renewable Heat Incentive: The Renewable Heat Incentive scheme (RHI) spend totalled £1,209m in 2024-25 (2023-24: £1,218m). RHI is a government environmental programme designed to increase the uptake of renewable heat to help reduce carbon emissions and meet the UK’s renewable energy targets. The department closed the RHI scheme to new applicants. Accredited installations are eligible to receive payments over 20 years for the non-domestic and over 7 years for domestic based on the amount of eligible heat generated. The scheme operates within England, Scotland, and Wales.

5. Finance expense

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Change in fair value – financial assets	-	-	12	12
Net loss/(gain) on foreign exchange	-	1	-	-
Borrowing costs on provisions	30	2,608	14	1,438
Interest charges under finance leases	5	7	5	6
Change in fair value – Financial Assets and Liabilities	11	11	-	-
Total	46	2,626	31	1,456

The increase in borrowing costs on provisions was predominantly due to the unwinding of discount of provisions costs for nuclear decommissioning of £2,507m (2023-24: £1,361m). Further detail on the movements in provisions can be found in notes 4.3 and 19.

There was also an additional expense of £1m (2023-24: £nil) due to foreign exchange losses.

6. Income

6.1 Operating income

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Fees, charges and recharges to/ from external customers and central government organisations	61	78	59	132
Levy income	-	3,509	-	2,945
Sales of goods and services	8	1,260	7	1,003
Miscellaneous income	-	13	1	10
Current grants and capital grants	1	2	5	6
Other operating income	1	29	13	39
Total	71	4,892	85	4,135

Core department:

Fees, charges and recharges to/from external customers and central government organisations for the core department were £61m (2023–24: £59m).

This includes Integrated Corporate Services (ICS) recharges to other government departments. ICS is hosted by the Department for Energy Security and Net Zero (DESNZ) but provides services equally to DESNZ and the Department for Science, Innovation and Technology (DSIT); as well as some services to the Department for Business and Trade (DBT).

All costs incurred by ICS are charged at cost only to participating departments, using a recharging methodology signed off by the Oversight Board which is co-chaired by the Second Permanent Secretary (DESNZ) and the Chief Operating Officer (DSIT).

Departmental group:

Within levy income, Electric Settlements Company’s (ESC) income from capacity market suppliers was £1,254m (2023–24: £1,031m) and LCCC’s supplier obligation levy income of £2,198m (2023–24: £1,864m). Within ‘Sales of goods and services’, NDA’s revenue was £1,193m (2023–24: £955m). NDA has 2 contracts with EDF Energy for managing their spent fuel. These are:

1. The ‘historic’ contract which is a combination of spent fuel reprocessing and the subsequent treatment and management of the waste and products which arise from the reprocessing process.

2. The ‘future’ contract which relates to post 2005 spent fuel, in which the commercial arrangement is for NDA to take ownership of (and therefore the liability for) further arisings of spent fuel, recognising revenue upon the receipt of fuel from EDF, a process which will continue until c. 2032. Further details can be found in the NDA’s annual report and accounts.

6.2 Finance income

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Effective Interest from amortised cost assets	18	18	21	21
Interest income from FVTPL assets	24	24	412	414
Interest income from amortised cost assets	2	30	8	30
Dividend income from investments in joint ventures, associates and public dividend capital	84	-	86	-
Total	129	73	527	465

Core department:

In 2024–25 the core department recognised finance income of £129m (2023–24: £527m). This includes £24m (2023–24: £412m) of finance income relating to the financial asset held by Bulb, and £84m (2023-24: £86m) of dividends received from Urenco through Enrichment Holdings Limited shown in note 14 ‘Investments in joint ventures and associates’.

Departmental Group:

Total finance income at departmental level has reduced to £73m as at 31 March 2025 (2023-24: £465m).

Interest from amortised cost assets amounted to £30m (2023-24: £30m). This £30m is represented by Sizewell C (£15m), Great British Nuclear (£8m), NDA (£3m), UKAEA (£2m) and DESNZ Core (£2m). This is a combination of interest receivable from private sector loans, public corporations and central government.

7. Property, plant and equipment

Departmental group 2024–25

	Land £m	Buildings £m	Leasehold improvements £m	Information technology £m	Plant and machinery £m	Furniture, fixtures and fittings £m	Transport equipment £m	Assets under construction £m	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2024	507	402	44	47	4,386	8	10	1,909	1	7,314
Additions	(1)	-	-	3	16	-	1	2,203	-	2,222
Disposals	-	-	(5)	(1)	-	-	-	(1)	-	(7)
Transfers	-	(2)	-	-	-	-	-	(1)	-	(3)
Reclassifications	-	41	-	8	6	1	-	(57)	-	(1)
Revaluations	(4)	10	-	-	1	-	-	-	-	7
At 31 March 2025	502	451	39	57	4,409	9	11	4,053	1	9,532
Depreciation
Balance at 1 April 2024	-	(243)	(39)	(30)	(4,219)	(6)	(7)	(1)	-	(4,545)
Charged in year	-	(6)	-	(6)	(28)	(1)	(2)	-	-	(43)
Disposals	-	-	5	1	-	-	-	-	-	6
Impairments	-	-	-	-	(14)	-	-	-	-	(14)
At 31 March 2025	-	(249)	(34)	(35)	(4,261)	(7)	(9)	(1)	-	(4,596)
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936
Carrying amount at 1 April 2024	507	159	5	17	167	2	3	1,908	1	2,769
Asset financing
Owned	502	202	5	22	148	2	2	4,052	1	4,936
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936
Of the total: Core department	-	-	-	4	-	-	-	7	-	11
Of the total: NDPBs and other designated bodies	502	202	5	18	148	2	2	4,045	1	4,925
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936

Departmental group 2023–24

	Land £m	Buildings £m	Leasehold improvements £m	Information technology £m	Plant and machinery £m	Furniture, fixtures and fittings £m	Transport equipment £m	Assets under construction £m	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2023	75	371	81	36	4,366	8	11	982	-	5,930
Additions	427	-	(1)	1	13	-	-	980	1	1,421
Disposals	-	-	(38)	-	-	(1)	(1)	-	-	(40)
Impairments	-	-	-	-	-	-	-	(1)	-	(1)
Reclassifications	-	34	-	10	7	1	-	(52)	-	-
Revaluations	5	(4)	1	-	2	-	-	-	-	4
At 31 March 2024	507	401	43	47	4,388	8	10	1,909	1	7,314
Depreciation
Balance at 1 April 2023	-	(238)	(45)	(23)	(4,177)	(6)	(6)	(1)	-	(4,496)
Charged in year	-	(5)	(32)	(7)	(28)	(1)	(2)	-	(75)
Disposals	-	-	38	-	-	1	1	-	-	40
Impairments	-	-	-	-	(14)	-	-	-	-	(14)
At 31 March 2024	-	(243)	(39)	(30)	(4,219)	(6)	(7)	(1)	-	(4,545)
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769
Carrying amount at 1 April 2023	75	133	36	13	189	2	5	981	-	1,434
Asset financing
Owned	507	158	4	17	169	2	3	1,908	1	2,769
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769
Of the total: Core department	-	-	1	5	-	-	-	5	-	11
Of the total: NDPBs and other designated bodies	507	158	3	12	169	2	3	1,903	1	2,758
Carrying amount at 31 March 2024	507	158	4	17	169	2	3	1,908	1	2,769

Departmental group:

The professional valuations of land and buildings undertaken within the departmental group were prepared in accordance with the Royal Institute of Chartered Surveyors (RICS) Valuation Standards (6th Edition), the ‘Red Book’. Unless otherwise stated, land and buildings are professionally revalued every 5 years and where appropriate in the intervening period, relevant indices are used. The most significant land and buildings at 31 March 2025 were held by Nuclear Decommissioning Authority (NDA), UKAEA and Sizewell C.

Assets under construction (AUC) additions as at 31 March 2025 include £1,736.3m (31 March 2024 £918.5m) relating to the construction of the Sizewell C Nuclear power station. This includes expenditure directly attributable to bringing the Sizewell C asset into working condition for its intended use such as planning, site preparation, associated development, safety compliance and the cost of developing supply chain contracts.

AUC additions of £394.9m as at 31 March 2025 (nil 31 March 2024) relate to Net Zero North Sea Storage Ltd (NZNSSL) and the construction of onshore and offshore CO₂ pipelines, injection wells, subsea infrastructure, control rooms, and compression facilities.

Other significant A U C additions of £60.8m as at 31 March 2025 (£57.4m 31 March 2024) relate to UKAEA driven by the new LIBRTI fusion project and the continued tritium loop facility.

In accordance with the FReM, the majority of leasehold improvements, information technology, furniture, fixtures and fittings and plant and machinery are held at depreciated historic cost as a proxy for fair value as the assets have short useful lives or low values. Land, freehold buildings, dwellings, transport equipment and the remainder of plant and machinery are held at fair value based on professional valuations.

Within the departmental group, a variety of valuation techniques are used depending upon whether the PPE asset is a specialised asset or a non-specialised asset. Where the PPE asset is a specialised asset, a depreciated replacement cost valuation is used, for example by research facilities. Where the PPE asset is a non-specialised asset, an existing-use valuation is used, for example for land and office buildings. Depreciated replacement cost (DRC) valuations are based on a number of unobservable inputs; these would be classified as level 3 in accordance with IFRS 13. Existing-use value (EUV) valuations are based on a number of market-corroborated but unobservable inputs, for example, land valuations are based on similar prices per hectare adjusted for the specific location of the land, whilst other EUV valuations use specific unobservable inputs, such as rental yields. The EUV valuations inputs are classified as level 2 and level 3 in accordance with IFRS 13.

Further information can be found in the financial statements of the individual bodies’ accounts.

8. Right-of-use assets

Departmental group 2024-25

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
Balance at 1 April 2024	16	198	9	20	243
Additions	10	98	-	1	109
Disposals	1	(10)	-	(2)	(11)
Remeasurements	-	2	-	-	2
Capitalised Provisions (Leased Non-PFI)	-	1	-	-	1
Revaluations	-	(1)	-	-	(1)
At 31 March 2025	27	288	9	19	343
Depreciation
Balance at 1 April 2024	(2)	(23)	(8)	(9)	(42)
Charged in year	-	(16)	1	(5)	(20)
Disposals	-	(2)	-	1	(1)
Revaluations -	7	-	-	7
At 31 March 2025	(2)	(34)	(7)	(13)	(56)
Carrying amount at 31 March 2025	25	254	2	6	287
Carrying amount at 31 March 2024	14	175	1	11	201
Of the total: Core department	-	125	-	3	127
Of the total: NDPBs and other designated bodies	25	129	2	3	160
Carrying amount at 31 March 2025	25	254	2	6	287

Departmental group 2023-24

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
At 31 March 2023	11	108	8	24	151
Balance at 1 April 2023	11	108	8	24	151
Additions	4	124	1	6	135
Disposals	1	(34)	-	(10)	(43)
Revaluations	-	-	-	-	-
At 31 March 2024	16	198	9	20	243
Depreciation
At 31 March 2023	(1)	(37)	(7)	(12)	(57)
Balance at 1 April 2023	(1)	(37)	(7)	(12)	(57)
Charged in year	(1)	(21)	(1)	(6)	(29)
Disposals	-	33	-	9	42
At 31 March 2024	(2)	(23)	(8)	(9)	(42)
Carrying amount at 31 March 2024	14	175	1	11	201
Carrying amount at 31 March 2023	10	71	1	12	95
Of the total: Core department	-	118	-	8	125
Of the total: NDPBs and other designated bodies	14	57	1	3	76
Carrying amount at 31 March 2024	14	175	1	11	201

Total additions to right-of-use assets during the year were £109m (2023-24: £135m). Most of this relates to acquisitions of leased buildings, which amounts to £98m (2023-24: £124m).

9. Intangible assets departmental group

Departmental group 2024-25

	Information technology £m	Software licences £m	Websites £m	Patents £m	Assets under construction £m	Total £m
Cost or valuation
Balance at 1 April 2024	64	7	-	-	9	80
Additions	6	1	-	-	58	65
Disposals	(1)	-	-	-	-	(1)
Reclassifications	1	1	-	-	(2)	-
Transfers	(2)	-	-	-	2	-
At 31 March 2025	68	9	-	-	67	144
Amortisation
At 31 March 2023	(37)	(5)	-	-	-	(42)
Balance at 1 April 2024	(8)	-	-	-	-	(8)
Charged in year	1	-	-	-	-	1
Disposals	(44)	(5)	-	-	-	(49)
At 31 March 2025	24	4	-	-	67	96
Carrying amount at 31 March 2025	27	2	-	-	9	38
Carrying amount at 1 April 2024	10	-	71	1	12	95
Asset financing
Owned	24	4	-	-	67	96
Carrying amount at 31 March 2025	24	4	-	-	67	96
Of the total: Core department	19	-	-	-	14	33
Of the total: NDPBs and other designated bodies	5	4	-	-	53	62
Carrying amount at 31 March 2025	24	4	-	-	67	96

Departmental group 2023-24

	Information technology £m	Software licences £m	Websites £m	Patents £m	Assets under construction £m	Total £m
Cost or valuation
At 1 April 2023	53	6	-	-	12	71
Additions	6	1	-	-	5	12
Disposals	(2)	-	-	-	-	(2)
Impairments	-	-	-	-	(1)	(1)
Reclassifications	7	-	-	-	(7)	-
At 31 March 2024	64	7	-	-	9	80
Amortisation
At 1 April 2023	(31)	(6)	-	-	-	(37)
Charged in year	(7)	-	-	-	-	(7)
Disposals	2	-	-	-	-	2
At 31 March 2024	(36)	(6)	-	-	-	(42)
Carrying amount at 31 March 2024	28	1	-	-	9	38
Carrying amount at 1 April 2023	22	-	-	-	12	34
Asset financing
Owned	28	1	-	-	9	38
Carrying amount at 31 March 2024	28	1	-	-	9	38
Of the total: Core department	20	-	-	-	8	28
Of the total: NDPBs and other designated bodies	8	1	-	-	1	10
Carrying amount at 31 March 2024	28	1	-	-	9	38

10. Derivative financial instruments

The most significant items included within Derivatives on the Consolidated Statement of Financial Position (SoFP) are the Contracts for Difference and the Low Carbon Hydrogen Agreements (LCHA).

In addition, Net Zero North Sea Storage Ltd (NZNSSL) is required by its project funding arrangements to implement interest rate derivative financial instruments to hedge its interest rate exposure on borrowings. NZNSSL’s strategy involves hedging 100% of its interest rate exposure to GBP SONIA floating rates until November 2036, and to subsequently extend the hedge’s maturity when market conditions are deemed favourable. NZNSSL has executed a vanilla over-the-counter interest rate swap with Barclays, opting not to apply hedge accounting. The swaps are measured at fair value through profit and loss (FVTPL) and have a fair value of £85m at 31 March 2025.

10.1 Contracts for Difference

10.1.1 Accounting policies:

Contracts for Difference (CfDs) are a mechanism introduced to support investment in low carbon generation projects. CfDs have been established as a private law contract between the ‘Generator’ and the Low Carbon Contracts Company Ltd (LCCC), a company wholly owned by the government and consolidated within the DESNZ departmental group accounts.

CfDs have been classified as derivatives in accordance with IFRS 9 ‘Financial Instruments’, designated as Fair Value Through Profit and Loss (FVTPL) and are stated at their ‘fair value’, which is equal to lifetime expected credit losses (ECL) in accordance with the requirements of IFRS 9. This means that the difference between fair value and the transaction price (nil) which was previously deferred is now included in the fair value. Any resultant gain or loss in fair value is recognised in the Consolidated Statement of Comprehensive Net Expenditure (SoCNE).

The fair value of any derivative is assessed by reference to IFRS 13 ‘Fair Value Measurement’, which provides 3 options for assessment. Fundamentally, the value should always reference an open marketplace but where no marketplace exists, an option is available for internally generated fair value. The different options are hierarchical and classed as level 1, 2, or 3 inputs, where level 1 is based on market prices, level 2 is based on observable data other than market prices and level 3 is used where level 1 or 2 data is unavailable.

The fair value of the CfDs has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term of the CfD. To calculate future cash flows, LCCC makes its best estimate of the payments which it will be committed to make, if and when the generators supply low carbon electricity in accordance with the contractual terms of the CfD. LCCC does this by selecting the discounted cash flow model, and also applying inputs and assumptions, to obtain a reliable estimate of future electricity prices which LCCC concludes results in the fair value measurement. The fair value measurement reflects what a market participant would take into account when establishing the price, and assumes an orderly transaction between market participants, at the measurement date.

The difference between the fair value of the liability at initial recognition (day one) and the transaction price (nil), is no longer deferred at departmental group level due to IFRS 9 FReM adaptation. See note 1 Accounting policies, judgements, and estimates.

The contract payment period is typically for 15 years, although contracts relating to biomass conversion have an expiration date in 2027 and the bespoke Hinkley Point C (HPC) contract has a contract payment period of 35 years. CfDs may be signed many years in advance of actual generation. The main benefit to generators is the fact that they can derive economic value from these contracts over the payment period life of the contract.

Typically, if generators start generating within their Target Commissioning Window (TCW) which is specified in the contract, then the generation period starts from the date of generation and, subject to all conditions being met, the generator can extract benefit for the full term of the contract. If generators miss the end of their TCW (and it is not extended under the terms of the contract) then the payment life period commences at the end of their TCW even if the generator is not in a position to generate. If the generator does not achieve the required minimum generation capacity by the contractual Longstop Date, LCCC has a right to terminate the CfD.

Changes in fair value arising after day 1 are recognised in the reporting period that they occur and are accounted for in the Consolidated Statement of Comprehensive Net Expenditure and in the Consolidated Statement of Financial Position as they arise.

10.1.2 Estimates – valuation of CfD liabilities and assets:

As at 31 March 2025 LCCC was counterparty to 363 contracts, including Hinkley Point C. Under the legislation there is an obligation placed on licensed electricity suppliers to fund the CfD liabilities as they crystallise through the Supplier Obligation Levy. The future levy amounts which will be received from the licensed suppliers will be accounted for within LCCC and will be triggered by the generation and supply of low carbon electricity.

The fair value of the unquoted CfD contracts is calculated using the income approach (discounted cash flow model) and represents LCCC’s best estimate of the payments which LCCC will be committed to make or payments receivable from generators, if and when the generators supply low carbon electricity in accordance with their contractual terms.

Annual cash flow is estimated as strike price minus forecast reference price, multiplied by estimated eligible generation volume. The series of periodic net operating expense is then discounted using a nominal discount rate based on the HM Treasury nominal rate of 2.15% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The valuation requires management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility.

In 2024 the decision was made to upgrade the financial model used to calculate the fair value of the CfDs. This was due to the exponential growth in the number of contracts LCCC is party to and to increase granularity from yearly to monthly in order to enhance cash flow forecasting by capturing seasonal trends. The model was also changed from real terms to using nominal discount rate, aligning itself with best practice. This change is considered a change in accounting estimate as it involves modifications to measurement techniques used to calculate the fair value of the CfDs. Accordingly, it is applied prospectively and the new model is in use from the current financial year.

One of the key inputs into the cash flow model is the estimate of future electricity prices, which is derived by applying certain inputs and assumptions such as overall electricity demand, commodity prices, carbon prices, government policy, technology, and deployment of new generating capacity. Most commercial and public sector modelling of the electricity system for long-term forecasting takes a very similar approach, but the detailed assumptions and methodology may differ.

Given the complexity, range of possible inputs, and long-term nature of the modelling, and also to some extent the iterative relationship between the expectations of overall system cost and long-term demand (especially industrial demand), long-term system forecasts are not generally seen as a single ‘most likely’ outcome with degrees of uncertainty either side. In fact, there are multiple sets of inputs that are internally consistent, and credible.

Often a set of these inputs will be used as a ‘scenario’, and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. The range of uncertainty can be significant when forecasting but does not necessarily mean that an individual scenario is not reasonable. The departmental group has used an independent industry recognised price series for the CfD valuation at 31 March 2025. The independent industry recognised price series applied was not an outlier of other industry recognised price series.

Fair value of CfDs (fair value through profit and loss):The following table provides an analysis of CfD assets and liabilities grouped into input levels 1 to 3 within the fair value hierarchy based on the degree to which the fair value is observable:

	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Liabilities	-	-	(92,501)	(92,501)
Assets	-	-	2,900	2,900
As at 31 March 2024	-	-	(89,151)	(89,151)
Liabilities	-	-	(93,427)	(93,427)
Assets	-	-	3,022	3,022
As at 31 March 2025	-	-	(90,405)	(90,405)

10.1.3 Key inputs and underlying assumptions for CfDs:

Estimated future forecast wholesale electricity prices: Forecast wholesale electricity prices used to estimate the fair value of CfDs are derived from an independent price series. Energy price series estimates the wholesale price by:

calculating the short run marginal cost (SRMC) of each plant (including a representation of plants in interconnected markets), taking account of start-up and shut-down costs
calculating the available output of intermittent renewables
calculating the half hourly demand for electricity by taking into account demand side response; and
determining the marginal plant required to meet demand

Economic, climate, policy, generation, and demand assumptions are external inputs to the model including demand load curves for both business and non-business days and seasonal impacts. Specific assumptions can also be modelled for domestic and non-domestic sectors and smart meter usage.

The forecast trajectory of electricity prices is uncertain. In the valuation, management has used an industry recognised independent price series which is not an outlier. The internal model used to calculate the fair value has been updated for short-term prices, installed capacities, TLM, and load factors.

In the valuation, the wholesale price has been reduced to reflect the price the wind generator is likely to receive. Additionally, wholesale electricity forward prices have been used for the liquid trading horizon (covering the nearest 2 year period). On windy days, the price that wind generators receive is likely to be reduced.

Estimated future electricity generation:

a. Transmission Loss Multiplier (TLM)
TLM reflects the fact that electricity is lost as it passes through the transmission system from generators to suppliers. If the TLM is incorrect, this will have implications for the volume of electricity subject to CfD payments. Any change in TLM will be corrected through adjustments in strike prices although the change in TLM is expected to be immaterial.

b. Start date
Generators nominate a Target Commissioning Date (TCD) in their binding application form for a CfD, and this date is specified in their CfD, following contract award. However, the generator is free to commission at any time within their Target Commissioning Window (TCW), a period of 1 year from the start of the TCW for most technologies, with no penalty, or after the end of the TCW and up to their ‘Longstop Date’ (1 to 2 years after the end of the TCW depending on technology and 7 years for HPC) with a penalty in the form of reduction of contract length for each day they are late in commissioning after the end of the TCW. The contract can be terminated if the generator has not commissioned 95% (or 85% for Investment Contracts and offshore wind) of their revised installed capacity estimate by the Longstop Date. The valuation uses the latest estimate from generators on the start date.

The estimated start dates for reactor 1 and reactor 2 of the Hinkley Point C project are 1 June 2030 and 1 June 2031, respectively. The TCW for reactor 1 is 1 May 2025 to 30 April 2029. The TCW for reactor 2 is 1 November 2025 to 31 October 2029. Therefore, the model is assuming contract erosion as the contract life (35yrs) will commence at the end of the TCW.

An EDF SA press release in January 2024 included further scenarios which included 3 outcomes, a baseline starting in June 2029, a midpoint of June 2030 and an unfavourable date of June 2031 all for reactor 1 with reactor 2 starting a year later. In the interest of preparing the accounts on a neutral basis the mid case has been chosen for the valuation. These scenarios are included in the sensitivity analysis below.

Given the length of time until the estimated start date there remains a degree of uncertainty and significant change to the start date will change the timing of future cash flows and have a material impact on the discounted fair value.

c. Installed capacity
The figure for the maximum installed capacity was provided by the generator in its application for a CfD and specified in its CfD contract following allocation. Thereafter the installed capacity figure can only be reduced by the generator for a permitted contractual construction event (which is a narrowly defined concept) or by the difference by which the relevant project has an installed capacity of 95% (or 85% in the case of Investment Contracts and offshore wind) of its current contractual installed capacity figure and 100%. The actual output of the generator will depend on the load factor.

The Hinkley Point C CfD does not have an installed capacity cap and is only entitled to CfD payment support up to a generation cap of 910,000,000 MWh.

d. Load factor
Load Factor is defined as the actual power output of a project as a proportion of its rated installed capacity. It is a percentage figure which is used to transform installed capacity into actual power output (generation). Load factor assumptions are based on reference factors published by DESNZ for given technology types; however, actual power outputs are sensitive to technological and environmental factors which may impact actual cash flows. Plant specific load factors (where a minimum of 6 months of generation data is available) is also available for consideration when valuing the CfDs.

For Hinkley Point C CfD, in previous years the generator (Nuclear New Build Generation Company (HPC) Limited (NNB GenCo)) provided LCCC with a generation profile, which forecasts the generation over the life of the contract. This year work was commissioned to gain an independent view which resulted in reasonable range where the midpoint has been chosen to value HPC.

Strike price
The strike price is an agreed price which determines the payments made to the generator under the contract with reference to its low carbon output and the market reference price.

The relevant strike price is specified in each CfD and is not intended to change for the duration of the project, other than through indexation to CPI and certain network charges, or in the event of certain qualifying changes in law. The strike price used in the valuation of the CfDs is the 2024-25 strike price and reflects the CPI rate for April 2025, in line with the requirements of the CfD contract.

The announcement made by Ofgem in April 2022 stating that from 1 April 2023 generators will no longer pay the Balancing Services Use of System (BSUoS) charges has been incorporated into the strike price forecast from 31 March 2024.

Further, this year included a one-off material event reducing the CfD liability by £54.3m, stemming from changes to partial pass-through costs in the CfD. The pass-through costs were the BSUoS charges which were partially passed on as part of Generators’ CfD Difference Payments. BSUoS charges were removed from Generators in the G B electricity market as of 1 April 2023. The nature of the existing CfD BSUoS compensation mechanism required adjustments by LCCC to reflect when Generators stopped paying BSUoS charges.

The nature of the original compensation mechanism, and L C C C’s adjustment mechanism, required L C C C to perform reconciliations of previous year’s C f D Difference Payments against adjusted Strike Prices. The value, and timing of these reconciliations were not known by L C C C until the 2024-25 financial year.

Fair value measurement of Hinkley Point C CfD
LCCC entered into the Hinkley Point C CfD on 29 September 2016. This project has a maximum lifetime generation cap of 910,000,000MWh. The contract will expire at the earlier of 35 years after the start date of the second reactor or when the total C f D payments made have reached the generation cap.

The Hinkley Point C CfD duration is more than double (35 years) the length of other CfDs (15 years) entered into by LCCC. This has made it considerably more challenging for management to provide a reliable single point fair value estimate for Hinkley Point C CfD and therefore represents a significant area of judgement. However, in recent years (since 2019/20), the availability of third-party price forecasts has improved to the extent that the departmental group has been able to recognise Hinkley Point C in a similar manner to other CfDs.

Sizewell C impact on strike price for Hinkley Point C
The strike price of the Hinkley Point C CfD will be reduced by £3/MWh if a CfD (or equivalent support) in relation to Sizewell C is entered into before the reactor 1 start date, with effect from the date of satisfaction of the Sizewell C condition.

Given progress in negotiations and legal developments around the proposed Regulated Asset Base (RAB) and government investment for Sizewell C during the year, management have concluded that Sizewell C is more likely to proceed than not and that the government investment and RAB together constitutes the aforesaid equivalent support. Management have therefore recognised 85% of the HPC CfD strike price adjustment, using £89.95/MWh (2023-24: £90.25/MWh) in the valuation. The impact of the strike price adjustment crystalising either way is included in the sensitivity analysis below.

Equity gain share for Hinkley Point C
The equity gain share mechanism consists of 2 separate components: (i) a mechanism to capture gains above specified levels where the Hinkley Point C project outperforms relative to the original base case assumptions; and (ii) a mechanism to capture gains above specified levels arising from the sale of equity and economic interests (direct or indirect) in the Hinkley Point C project.

In each case, as and when the Internal Rate of Return (IRR) thresholds are reached:

If the relevant IRR is more than 11.4%, LCCC will receive 30% of any gain above this level
If the relevant IRR is more than 13.5%, LCCC will receive 60% of any gain above this level

No adjustment to the valuation has been made for equity gain share on the grounds that none of the conditions outlined above have been met and it is currently not possible to reasonably estimate if they will be met in the future.

Construction gain share for Hinkley Point C
If the construction costs of Hinkley Point C come in under budget, the strike price will be adjusted downwards so that the gain (or saving) is shared with LCCC. The gain share is 50/50 for the first billion pounds, with savings in excess of this figure being shared 75% to LCCC and 25% to N N B Generation Company.

Reducing the strike price will reduce the amounts paid out to NNB Generation Company under the C f D, hence the benefit of the lower construction costs is shared between NNB Generation Company and ultimately consumers. There is, however, no similar upward adjustment if the construction cost of Hinkley Point C is over budget.

No adjustment to the valuation has been made for construction gain share on the grounds that there has not been any construction gain share during the year, and none is forecasted to occur in the future.

OPEX reopener for Hinkley Point C
The strike price may be adjusted upwards if the operational expenditure costs are more than assumed and downwards if they are less. There are 2 operational expenditure reopener dates, at 15 years and 25 years after the first reactor start date. The rationale behind the reopener is that the strike price is based on long-term assumptions on operational expenditure costs. The reopener provides a way of mitigating long-term cost risks for both parties.

No adjustment to the valuation has been made for OPEX reopener on the grounds that the OPEX reopener dates have not been reached yet and there is no evidence that original assumptions are invalid.

10.1.4 Sensitivity analysis:

Long-term system forecasts are not generally seen as a single most likely outcome with degrees of uncertainty either side. Rather there are multiple sets of inputs that are internally consistent and credible. A set of these inputs is usually used as a ‘scenario’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. Therefore, individual forecasts may use a very different set of assumptions such as generation mix, carbon and fuel costs, electricity demand and interconnector capacity, but still be within what we would describe as the ‘universe of reasonableness’.

Management has decided to use the reference case scenario of an industry recognised independent forecast that is not an outlier.

An additional element in the calculation of the C f D liability is the discount rate that is applied. Uncertainty increases with time and so the choice of discount rate plays a significant part in determining how much uncertainty is weighted into a present value calculation, a higher discount rate places less weight on increasingly more uncertain years of a present value calculation.

From 2024-25 LCCC is no longer using real terms to value the CfDs but has now aligned to industry practice and have applied the nominal discount rate from HMT of 2.15% adjusted by the latest CPI inflation forecasts for each modelled year.

For future year-on-year comparability, the table below shows the undiscounted valuation of the CfD liability.

	CfDs exc. HPC £m	HPC CfD £m	Total £m
As at 31 March 2021	38,865	61,221	100,086
As at 31 March 2022	34,844	58,381	93,225
As at 31 March 2023	25,627	60,424	86,051
As at 31 March 2024	33,003	57,716	90,719
As at 31 March 2025	47,918	80,311	128,229

The following table shows the impact on the fair value of C f Ds, classified under level 3, by applying reasonably possible alternative assumptions. Due to the significance and uniqueness of Hinkley Point C CfD, the impact (and certain assumptions) has been shown separately. Prior to 2025 the model was prepared in real terms. As part of the updated model this has changed to nominal rates, causing a larger increase in the undiscounted values.

	Favourable/ (unfavourable) HPC CfD £m	Favourable/ (unfavourable) Other CfDs £m	Favourable/ (unfavourable) Total impact £m
Change in fair value of CfDs if:
Highest price third party series	17,781	48,706	66,488
Lowest price third party series	(19,235)	(28,686)	(47,921)
Discount rate of 3.5%	11,975	3,774	15,749
2023-24 Discount rate	(1,063)	(303)	(1,366)
Undiscounted	(30,475)	(7,349)	(37,824)
Specific to Other CfDs:
2% more load factor	-	(811)	(811)
4% more load factor	-	(1,623)	(1,623)
2% less load factor	-	811	811
4% less load factor	-	1,623	1,623
Estimated Commissioning Date moves backward by 1 year	-	246	246
Generation starts at the earliest possible date	-	105	105
Specific to HPC CfD:
10% less load factor	4,984	-	4,984
2% increased load factor	(997)	-	(997)
Generation cap*	-	-	-
Generation brought forward 1 year from estimated start date	(420)	-	(420)
Generation start date delayed 1 year from estimated start date	1,420	-	1,420
Sizewell C strike price adjustment (100%, £3)	547	-	547
Sizewell C strike price adjustment (0%, £nil)	(3,100)	-	(3,100)

*From 2024-25 the H P C generation cap is no longer triggered based on their generation profile even if it reaches 100% load factor due to contract erosion.

The fair value is virtually certain upon the actual capacity generated once the plant is built and the electricity prices which will prevail at the time of generation. The favourable and unfavourable changes show how the impact of changes in capacity and prevailing electricity prices will affect the fair value of CfDs due to the change in the level of cash flows.

Significant unobservable inputs:
The following table discloses the valuation techniques and significant unobservable inputs for CfDs recognised at fair value and classified as level 3 along with the range of actual values used in the preparation of the financial statements.

	Fair value of CfDs	Valuation technique	Significant unobservable input	Range min-max	Units
2021	88,930	DCF	Electricity prices	24.62-77.77	£/MWh
2022	97,591	DCF	Electricity prices	37.84-244.00	£/MWh
2023	84,506	DCF	Electricity prices	39.07-141.35	£/MWh
2024	89,151	DCF	Electricity prices	25.54 – 78.94 £/MWh
2025	90,405	DCF	Electricity prices	41.51-295.13	£/MWh

From 2024-25 nominal rates have been used in the CfD model whereas prior years are in real terms.

The table below represents the movement in CfD valuation at 31 March 2025.

	LCCC CfDs assets £m	LCCC CfDs liabilities £m	Departmental group total £m
CfD liability as at 1 April 2023 recognised on the Consolidated Statement of Financial Position	2,598	(87,740)	(85,142)
Gain / Loss reclassification	(115)	115	-
Change in fair value during the year	172	(6,367)	(6,195)
Payments to the CfD generators	-	1,865	1,865
CfDs terminated in prior year	245	76	321
CfD liability as at 31 March 2024 recognised on the Consolidated Statement of Financial Position	2,900	(92,051)	(89,151)
Gain / Loss reclassification	(8)	8	-
Change in fair value during the year	130	(3,847)	(3,717)
Payments to the CfD generators	-	2,198	2,198
CfDs terminated during the year	-	265	265
CfD liability as at 31 March 2025 recognised on the Consolidated Statement of Financial Position	3,022	(93,427)	(90,405)
CfDs movement recognised in SoCNE, comprising:			1,254
CfD levy income recognised under other income	-	(2,198)	(2,198)
Remeasurement of CfD derivatives	(122)	3,574	3,452

Movement in CfDs valuation includes both expenditure relating to CfDs and income from supplier levy.

The table below represents the split of all CfD assets and liabilities between current and non-current. The entire Hinkley Point C liability is included in non-current liabilities.

LCCC CfD assets:

	CfDs as at 31 March 2025 £m	CfDs as at 31 March 2024 £m
Current	148	17
Non-current	2,874	2,883
Total LCCC CfD assets	3,022	2,900

LCCC CfD liabilities:

	CfDs as at 31 March 2025 £m	CfDs as at 31 March 2024 £m
Current	(2,656)	(3,055)
Non-current	(90,771)	(88,996)
Total LCCC CfD liabilities	(93,427)	(92,051)

10.2 Low Carbon Hydrogen Agreement

10.2.1 Accounting policies:

The Low Carbon Hydrogen Agreement (LCHA) is a private law contract between the ‘Producer’ and LCCC. LCHA underpins the hydrogen production business model (HPBM), which provides revenue support to hydrogen producers to overcome the operating cost gap between low carbon hydrogen and high carbon fuels. Initially the scheme will be funded by DESNZ until legislation is in place and there is an obligation placed on licensed gas shippers to fund the LCHA through the Gas Shipper Obligation (GSO).

The HPBM will support hydrogen producers awarded a LCHA by paying them a premium. This premium will be calculated as a difference between a strike price and a reference price, like the current CfD scheme. Generally, LCHA shares similarities with the C f D contract, both lasting 15 years with the requirement placed on producers to meet initial and operational conditions, to achieve minimum installed capacity by the contractual Longstop Date, with the payment period starting at the end of the Target Commissioning Window (TCW). To qualify, hydrogen production will need to meet the Low Carbon Hydrogen Standard (LCHS) requirements and be sold for qualifying purposes. The L C H S sets a maximum threshold of greenhouse gas emissions allowed in the production process for hydrogen to be considered ‘low carbon hydrogen’ and be eligible for support.

Under the LCHA no payment is made at the time of contract signing; instead, the LCCC payments are triggered once the producers begin hydrogen production and meet their obligations under the contract. LCCC is then contractually obligated to make 3 types of payments to hydrogen producers:

the Difference Amount (DA) payment to compensate the high cost of producing low-carbon hydrogen compared with counterfactuals such as natural gas
Price Discovery Incentive (PDI) payment which is intended to incentivise the sale of hydrogen above the natural gas price
Sliding scale top up (SSTU) payment which provides a higher subsidy when hydrogen sales fall below a threshold

Each of the LCHA payments has distinct accounting implications under IFRS. The DA and PDI are considered derivatives under IFRS 9, they are classified as FVTPL and recognised in the Consolidated Statement of Financial Position at inception, with any resultant gain or loss recognised in the Consolidated Statement of Comprehensive Net Expenditure. Changes in fair value arising after day 1 are accounted for in the reporting period that they occur. The SSTU is not considered a derivative, a liability to make SSTU payments arises when the volume of hydrogen sold fall below 50% of the reference volume.

10.2.2 Estimates – valuation of Green Hydrogen liabilities and assets:

The fair value of the LCHA has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term. The valuation requires management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility (note 10.2.3).

The DA is calculated by deducting the Reference Price from the Strike Price and multiplying the result by the aggregate value of the relevant hydrogen volumes sold by the producers. The Strike Price represents the unit price required by the producer to enable it to recover the costs of producing low carbon hydrogen and make an allowed return on its investment. The level and specific components of the Strike Price are negotiated on a project-by-project basis and include agreed eligible costs. The Reference Price is intended to represent the market value of the hydrogen sold by the producer, with the floor price set as the natural gas market price. The series of periodic net cash flows is then discounted using a real discount rate based on the HM Treasury nominal rate of 2.15% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The PDI calculation is linked to the increment by which the achieved sales price for hydrogen exceeds the natural gas market price. Without a live U K tradeable hydrogen market, the hydrogen prices are forecasted to mirror natural gas prices, resulting in the liability for PDI estimated to be £Nil. Future movements in the PDI valuation will be recognised in the Consolidated Statement of Comprehensive Net Expenditure in the periods when the trigger events occur.

The SSTU payments are calculated as an additional amount for each unit of hydrogen sold when the sales of the producers fall below the 50% threshold, The current assumption is that SSTU will not be triggered, therefore no liability for S S T U is recognised in the reporting period.

The sensitivity analysis (note 10.2.4) looks at scenarios that include PDI should it be triggered. The SSTU payments are calculated as an additional amount for each unit of hydrogen sold when the sales of the producers fall below the 50% threshold, The current assumption is that SSTU will not be triggered, therefore no liability for S S T U is recognised in the reporting period.

As at 31 March 2025 LCCC was counterparty to 5 LCHA contracts from the first Hydrogen Allocation Round (HAR1). A further 5 LCHA contracts were signed post 31 March 2025.

The following table provides the valuation of LCHA liabilities and assets grouped into input levels 1 to 3 within the fair value hierarchy based on the degree to which the fair value is observable:

	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
As at 31 March 2024	-	-	-	-
Liabilities	-	-	(1,243)	(1,243)
Assets	-	-	-	-
As at 31 March 2025	-	-	(1,243)	(1,243)

10.2.3 Key inputs and underlying assumptions for LCHA:

Estimated future forecast wholesale hydrogen prices: There is currently no well-defined hydrogen market therefore predicting sales prices is challenging. The model currently assumes that the natural gas price is the hydrogen prices as this represents the minimum threshold at which Producers can viably sell hydrogen.

Forecasted wholesale gas prices used to estimate the fair value of the LCHA are derived from an independent price series. Energy price series estimates the wholesale price by:

calculating the short run marginal cost (SRMC) of each plant (including a representation of plants in interconnected markets), taking account of start-up and shut-down costs
calculating the available output of intermittent renewables
calculating the half hourly demand for electricity by taking into account demand side response; and
determining the marginal plant required to meet demand

Economic, climate, policy, generation, and demand assumptions are external inputs to the model including demand load curves for both business and non-business days and seasonal impacts. Specific assumptions can also be modelled for domestic and non-domestic sectors and smart meter usage.

The forecast trajectory of gas prices is uncertain. In the valuation, management has used an industry recognised independent price series which is not an outlier.

Estimated future wholesale hydrogen production

a. Start date
The commencement date is specified in the LCHA following contract award where the producer nominates a Target Commissioning Date (TCD). However, the producer is free to commission at any time within their Target Commissioning Window (TCW), a period of 1 year from the start of the TCW to the end of the TCW and up to their ‘Longstop Date’. The Longstop date is defined as 1 year after the end of the TCW with no penalty incurred as long as the producer reaches 80% of their installed capacity estimate by the end of their TCW and 95% by their Longstop Date.

A penalty in the form of reduction of contract length for each day they are late in commissioning is applied after the end of the TCW. The contract can be terminated if the producers has not commissioned 80% of their revised installed capacity estimate by the TCW end date and 95% by their Longstop Date. The valuation uses the latest estimate from producers on the start date.

b. Sales volume
This is the total invoiced volume from the producer, eligible for inclusion in the LCHA. The model currently assumes that all volumes qualify as there is no historical data. Therefore 100% of the producer’s reference volume is used. The reference volume is based on the initial installed capacity and the assumed load factor. If the volume factor falls below 50% it would activate the SSTU payment which is designed to protect producers in the early stages of developing a U K hydrogen market.

The model assumes that the sales volume is equivalent to the reference volume. The reference volume is assumed load factor multiplied by Installed Capacity multiplied by total number of billing days and hours in a day. The represents the maximum quantity producers can sell to an offtaker over the contract duration, ensuring compliance with the contractual terms and assuming that producers will optimise revenue potential.

c. Strike price
The strike price is an agreed price which determines the payments made to the producer under the contract with reference to its hydrogen output and the market reference price.

The relevant strike price is specified in each LCHA and is not intended to change for the duration of the project, other than through indexation to CPI and certain network charges, or in the event of certain qualifying changes in law. The strike price used in the valuation of the LCHA is the 2024-25 strike price and reflects the CPI rate for January 2025, in line with the requirements of the LCHA contract.

d. Reference price
The DA is calculated as the strike prices less the reference price where the reference price is the greater of the floor price and the achieved sales price. If the difference between the strike price and the reference price is positive LCCC shall pay the producer on a monthly basis. However, if the difference is negative, indicating that the reference price exceeds the strike price, the producer shall pay the DA to LCCC.

Based on initial forecast data received, achieved sales price is likely to equal gas prices which will result in the reference price also matching the gas price meaning that a DA is payable from LCCC to the producer for the length of the LCHA.

10.2.4 Sensitivity Analysis:

Long-term system forecasts are not generally seen as a single most likely outcome with degrees of uncertainty either side. Rather there are multiple sets of inputs that are internally consistent and credible. A set of these inputs is usually used as a ‘scenario’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. Therefore, individual forecasts may use a very different set of assumptions such as achieved sales price, hydrogen sales volume, installed capacity estimate, carbon and fuel costs and gas demand, but still be within what we would describe as the ‘universe of reasonableness’. Management has decided to use the reference case scenario of an industry recognised independent forecast that is not an outlier.

An additional element in the calculation of the LCHA liability is the discount rate that is applied. Uncertainty increases with time and so the choice of discount rate plays a significant part in determining how much uncertainty is weighted into a present value calculation, a higher discount rate places less weight on increasingly more uncertain years of a present value calculation.

LCCC has derived a real discount rate from the HM Treasury nominal discount rate of 2.15% adjusted by the latest CPI inflation forecasts for each modelled year, given that the strike price is indexed to CPI, resulting in the following real discount rates:

	Real discount rate
2025-26	-1.00%
2026-27	0.22%
2027-28	0.15%
2028-29 and thereafter	0.15%

For comparability an undiscounted valuation of the LCHA has been included below:

	LCHA £m
As at 31 March 2025	1,255

The following table shows the impact on the fair value of LCHA, classified under level 3, by applying reasonably possible alternative assumptions. The changes in the table below include all 3 types of payment (DA, PDI and SSTU) should any of them be triggered. A favourable result is a decrease to the liability and unfavourable is an increase to the liability.

Change in fair value of LCHA if:	Favourable/ (unfavourable) LCHA £m
Decrease volume factor 80%	248.7
Decrease volume factor 40%	746.0
Increase price factor 2.0	141.7
Increase price factor 1.5	70.8
Start date delay 1 year	3.6
Start date delay 2 years	7.8
Highest price third party series	(5.5)
Lowest price third party series	20.3
Discount rate of 3.5%	143.2
2023-24 Discount rate 2.05%	(11.6)
Undiscounted	(11.1)

The favourable and unfavourable changes show the impact of capacity (volume factor) and hydrogen prices (price factor) as these will affect the fair value of LCHA due to the change in the level of cash flows.

Sales volumes relate to the volume of hydrogen that producers are able to trade to qualifying offtakers. The model assumes that 100% of volumes qualify resulting in the largest DA payable. Should the volume factor fall below 50% this would trigger the SSTU payment mechanism. If SSTU is triggered and the volume factor fell to 40% as per the sensitivity analysis above SSTU payments have been forecasted to total £98.1m.

The price factor in the model has been set to 1 which means that the gas price has been achieved. Anything above this indicates that producers have been able to sell hydrogen above the gas price and so PDI is triggered for establishing growth in the UK hydrogen market. A PDI payment is less than a DA payment hence the LCHA portfolio would reduce if this was triggered.

11. Investments and loans in other public sector bodies

	Investments in public sector companies £m	Other investments and loans £m	Core department £m	Elimination of shares and other investments and loans held in NDPBs £m	NDPBs ordinary shares £m	Departmental group total £m
Balance at 1 April 2023	808	2,645	3,453	(364)	611	3,700
Additions	1,089	14	1,103	(1,089)	-	14
Redemptions	-	(331)	(331)	-	-	(331)
Revaluations	(5)	695	690	-	85	775
Unwinding of discount	-	5	5	-	-	5
Loans repayable within 12 months transferred to current assets	-	-	-	(343)	-	(343)
Balance at 31 March 2024	1,892	3,028	4,920	(1,796)	696	3,820
Additions	2,722	10	2,732	(2,728)	697	701
Redemptions	-	(2,907)	(2,907)	-	-	(2,907)
(Impairments)/impairment reversal	(38)	-	(38)	38	-	-
Revaluations	64	-	64	-	27	91
Unwinding of discount	-	5	5	-	-	5
Balance at 31 March 2025	4,640	135	4,775	(4,485)	1,420	1,709
Non-current	4,640	86	4,726	(4,485)	1,420	1,661
Current	-	49	49	(1)	-	48

11.1 Investments in other public sector bodies

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	1,892	793	808	1,055
Transfers in/(out)	-	-	-	(343)
Additions	2,722	697	1,089	-
(Impairments)/impairment reversal	(38)	-	-	-
Revaluations	64	91	(5)	81
Balance at 31 March	4,640	1,581	1,892	793
Comprising: Ordinary shares held within the departmental boundary – held at cost	3,783	-	1,795	-
Comprising: Ordinary shares held outside the departmental boundary – held at fair value	857	1,581	97	793
Balance at 31 March	4,640	1,581	1,892	793

Core department: Investments in other public sector bodies held within the departmental boundary:

In accordance with the FReM, ordinary shares and equity instruments held within the departmental boundary are carried at historical cost less any provision for impairment. They are eliminated on consolidation.

Sizewell C (Holding) Limited (SZC)

The core department through the Secretary of State (SoS) holds 89,281,532 ordinary shares (31 March 2024: 37,289,810) in Sizewell C (Holding) Limited (SZC), each with a nominal value of £1
The core department’s holding is in the form of shares and a shareholder loan issued to SZC. The core department has no contractual right to demand cash or shares from SZC in payment of this loan and the asset is accounted for as equity under the provisions of IAS 32: Financial Instruments: Presentation
The core department purchased equity instruments at a cost of £2,025m during the year (31 March 2024: £1,089m). The core department’s cumulative equity investment had a cost of £3,477m at 31 March 2025 (31 March 2024: £1,452m)
The principal objective of the company is the development of the Sizewell C nuclear power station in Suffolk
The material asset held by the subsidiary company, NNB Generation Company (SZC) Ltd, is the asset under construction of £3,751m (31 March 2024: £2,016m) included in note 7. Non-controlling interest of £541m (31 March 2024: £542m) is recognised in relation to the investment and is included in the Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

UK Green Infrastructure Platform (UKGIP)

UKGIP was established to enable the government to retain an interest in 5 existing Green Investment Bank (GIB) investments. The Green Investment Group is the remaining 10% shareholder
The core department through the S o S held 90% of the share capital of UK Green Infrastructure Platform Limited in the form of 900 ordinary shares, each with a nominal value of £1
Following Special Resolutions passed on 6 April 2022, UKGIP was wound up via a Members’ Voluntary Liquidation, having fulfilled its objectives to manage the government’s interests in the unsold assets from the Green Investment Bank. UKGIP was dissolved on 15 August 2024

Low Carbon Contracts Company Limited (LCCC)

The core department through the SoS holds 1 ordinary share in LCCC with a nominal value of £1
The principal objective of the company is to be the counterparty to and manage Contracts for Difference (CfDs) throughout their lifetime

Electricity Settlements Company Limited (ESC)

The core department through the SoS holds 1 ordinary share in ESC with a nominal value of £1
The principal objective of the company is to oversee settlement of the Capacity Market agreements

Enrichment Holdings Limited (EHL)

The core department through the SoS holds 2 shares of £1 each in E H L with a nominal value of £2
EHL has been set up as a holding company, along with a subsidiary company, Enrichment Investments Limited (EIL), solely to hold the government’s one-third share in Urenco Limited, an entity operating in the civil uranium enrichment sector

Great British Energy – Nuclear (GBE-N) Limited, previously British Nuclear Fuels Limited (BNFL)

The core department holds 50,000 ordinary shares in GBN at a nominal value of £1 each. 49,999 of these shares are held through the SoS and the Treasury Solicitor holds 1 ordinary share. The core department’s holding had a carrying value of £305m at 31 March 2025 (31 March 2024: £343m)

Great British Energy Group (GBE) Limited

GBE was incorporated on 10 October 2024, with the core department, through the SoS, holding all of the 100 ordinary shares at a nominal value of £1 each

Core department:

Ordinary Shares held outside of the departmental boundary.

Shares held outside of the departmental boundary are carried at fair value through other comprehensive income.

National Energy Systems Operator Limited (NESO)

NESO was acquired by the department from National Grid Plc on 1 October 2024 and established as the public corporation responsible for the strategic overview and coordination of Great Britain’s energy system
The core department through the SoS holds 330,000,100 shares with a nominal value of £0.01 each
The shareholding is held at fair value, but because there is no active market for these shares the net asset value is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2025 was £751m

NNL Holdings Limited (NNLH)

The core department through the S o S holds 10,000,002 shares of £1 each in NNLH with a nominal value of £10,000,002
NNLH has been set up as a holding company, to hold all the shares in the National Nuclear Laboratory Limited
The shareholding is held at fair value, but because there is no active market for these shares the net asset value of NNLH is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2025 was £106m (31 March 2024: £97m)

Departmental group:

NDA subsidiaries

The NDA controls the following subsidiaries, all of which are outside the departmental group boundary and not consolidated into these accounts. The holdings are valued at fair value. As there is no active market, the net assets of the entities are considered the most appropriate approximation for fair value and amounted to £721m as at 31 March 2025 (31 March 2024: £683m).

Name	Nature of business	Country of incorporation	Holding entity	Proportion of ordinary shares held
Rutherford Indemnity Limited	Nuclear insurance	Guernsey	NDA	100%
Direct Rail Services Limited	Rail transport services within the UK	UK	NDA	100%
Pacific Nuclear Transport Limited^{[note i]}	Transportation of spent fuel, reprocessing products and waste	UK	NDA	72.00%
International Nuclear Services Limited	Contract management and the transportation of spent fuel, reprocessing products and waste	UK	NDA	100%
NDA Properties Limited	Property management	UK	NDA	100%
NDA ARCHIVES LIMITED^{[note ii]}	Archives activities	UK	NDA	100%
International Nuclear Services France SAS^{[note I]}	Transportation of spent fuel	France	NDA	100%
International Nuclear Services Japan KK^{[note I]}	Transportation of spent fuel	Japan	NDA	100%

(i) Ownership through International Nuclear Services Limited.

(ii) Included in the departmental boundary but excluded from consolidation on materiality grounds.

11.2 Loans in public sector bodies

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	3,027	3,026	2,645	2,645
Additions	10	5	14	14
Repayments	(2,907)	(2,907)	(331)	(331)
Unwinding of Discount	5	5	5	5
Impairments	-	-	-	-
Revaluations	-	-	694	694
Balance at 31 March	135	128	3,027	3,027
Out of which: Due within 12 months	49	48	2,961	2,961
Out of which: Due after 12 months	86	80	66	66

Core department:

The most significant loans are detailed below.

Energy Efficiency Loans Scheme and Recycling Funds
The core department’s Energy Efficiency Loans Scheme was set up under the Environmental Protection Act 1990 to help businesses and public sector organisations reduce their energy costs by providing interest free loans for the implementation of energy efficiency projects.

The total carrying amount at 31 March 2025 is £127m (31 March 2024: £188m). All outstanding loans are to public sector organisations and are reported at amortised cost under IFRS 9.

The loans are to non-consolidated bodies and not eliminated on consolidation.

Bulb Energy Ltd (in special administration) W A M A agreement with Octopus Energy Operations Limited
Following ONS classification of Bulb to central government, the department recognised the financial asset held by Bulb in relation to WAMA agreement in the core department’s financial statements in line with IFRS 3. The initial funding to Bulb to enable it to enter into WAMA agreement with Octopus was provided by the core department during 2022-23. The objective was to ensure that the special administration regime and exit from administration achieves the best outcome practicable for energy customers, taxpayers, and the industry. The financial asset was measured at fair value through profit or loss under IFRS 9. The loan was repaid in full in 2024-25 and the fair value at 31 March 2025 is £nil (31 March 2024: £2,838m).

11.3 Special shares

The Secretary of State holds 1 special share in each of the entities listed below. The list includes a summary of the significant terms of shareholding, and is not a comprehensive record. Further details can be obtained from the annual report and financial statements of each body or their Articles of Association. The core department does not recognise the special or ‘golden’ shares on its SoFP.

British Energy Group plc Special Share created on 13 January 2005 and held jointly by the Secretary of State for Energy, Security and Net Zero and the Secretary of State for Scotland
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- any purchase of more than 15% of the company’s shares
- the issue of shares carrying voting rights of 15% or more in the company
- variations to the voting rights attaching to the company’s shares
- the giving of consent in respect of the issue of shares by, the sale of shares in or amendments to the Articles of Association of various subsidiaries in certain cases

British Energy Generation Ltd Special Share created in 1996 is held solely by the Secretary of State for Energy, Security and Net Zero
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- the disposal of any of the nuclear power stations owned by the company
- prior to the permanent closure of such a station, the disposal of any asset which is necessary for the station to generate electricity

Nuclear Liabilities Fund Ltd Special ‘A’ Share created in 1996 is held solely by the Secretary of State for Energy Security and Net Zero (there is also a ‘B’ share held by British Energy)
The consent of the Special Shareholder is required for any of the following:
- to change any of the provisions in the Memorandum of Association or Articles of Association
- to alter the share capital or the rights attached thereto
- the company to create or issue share options
- the ‘B’ Special Shareholder or any of the Ordinary shareholders to dispose or transfer any of their rights in their shares
- the company to pass a members voluntary winding-up resolution
- the company to recommend, declare or pay a dividend
- the company to create, issue or commit to give any loan capital
- the company to issue a debenture
- the company to change its accounting reference date

12. Other financial assets

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	-	258	258	341	341
Additions	-	34	34	43	43
Repayments	-	(2)	(2)	(125)	(125)
Unwinding of Discount	-	2	2	2	2
Revaluations	-	(7)	(7)	5	5
Impairments	-	-	-	(8)	(8)
Balance at 31 March	-	285	285	258	258

Core department:

The most significant balances are detailed below.

Private sector loans: Heat Networks Investment Project (HNIP):

HNIP is a government funding programme that aims to increase the number of heat networks being built, deliver carbon savings and help create the conditions necessary for a sustainable heat network market to develop. The core department issued loans under the project in the 2020-21 and 2021-22 financial years, which at 31 March 2025 had a carrying value of £69m (31 March 2024: £68m). In accordance with IFRS 9, the loans are reported at amortised cost.

Investment funds: Mobilising Finance for Forests (MFF):

MFF was established in 2021 as a blended finance investment programme to combat deforestation and other environmentally unsustainable land use practices contributing to global climate change. The core department invested a further £13m in the year and inclusive of previous investments and revaluations, the carrying value of the asset at 31 March 2025 was £124m (31 March 2024: £115m). In accordance with IFRS 9, the investment is measured at fair value through profit and loss with fair value movements going directly to the SoCNE.

Private sector shares: Global Climate Partnership Fund (GCPF):

GCPF was established in 2009 as an investment company to provide financing for energy efficiency and small-scale renewable energy projects in developing economies. At 31 March 2025 the value of the core department’s holding was £43m (31 March 2024: £39m). In accordance with IFRS 9, the investment is held at fair value through other comprehensive income.

12.1 Other loans and investments

	Term deposits £m	Private sector loans £m	Private sector shares £m	Investment funds £m	Total £m
Balance at 1 April 2023	1	187	49	104	341
Additions	-	14	-	29	43
Redemptions	(1)	(124)	-	-	(125)
Revaluations	-	-	(10)	15	5
Unwinding of discount	-	2	-	-	2
Impairments	-	(8)	-	-	(8)
Balance at 1 April 2024	-	70	39	149	258
Additions	-	-	-	34	34
Redemptions	-	(2)	-	-	(2)
Revaluations	-	-	4	(11)	(7)
Unwinding of discount	-	2	-	-	2
Balance at 31 March 2025	-	70	43	172	285
Of the total: Core department	-	70	43	172	285
Of the total: NDPBs and other designated bodies	-	-	-	-	-
Balance at 31 March 2025	-	70	43	172	285

13. Recoverable contract costs

The departmental group has commercial agreements in place under which some or all of the expenditure required to settle nuclear provisions will be recovered from third parties. Recoverable contract costs comprise costs which were incurred before the revenue recognition period of each contract and which are amortised each year in line with revenue (‘Historic costs’ below) and costs which typically form part of the nuclear provision, which are restated each year for unwinding of discount and other changes in estimate, and released as they occur in each year (‘Future costs’ below). Net recoverable costs at 31 March 2025 were £635m (31 March 2024: £582m). Further details can be found in NDA’s annual report and accounts.

Recoverable contract costs relating to nuclear provisions	31 March 2025 Departmental group £m	31 March 2024 Departmental group £m
Gross recoverable contract costs	3,414	3,911
Less applicable payments received on account	(2,758)	(3,315)
Less associated contract loss provisions	(21)	(14)
Balance at 31 March	635	582

The balances above relate to the NDA. The table below shows the movements in gross recoverable contract costs during the year.

Movements in gross recoverable contract costs

	31 March 2025 Departmental group £m	31 March 2024 Departmental group £m
Gross recoverable contract costs at 1 April	3,911	4,461
Increase/(decrease) in year	(136)	(33)
Unwinding of discount	58	29
Amortisation of recoverable contract costs	(118)	(116)
Release in year – continuing operations	(301)	(430)
Balance at 31 March	3,414	3,911

The gross balance of recoverable contract costs of £3,414m (31 March 2024: £3,911m) comprises £930m (31 March 2024: £1,048m) of past costs which were incurred before the revenue recognition period of the related contracts and will be amortised in future years in line with revenue and £2,484m (31 March 2024: £2,863m) of probable future costs which form part of the nuclear decommissioning provision (note 19.1) and will be released as they are incurred.

The movement in the gross recoverable contract costs during the year broken down by the type of costs are detailed in the table below.

	31 March 2025 Departmental group Historic costs £m	31 March 2025 Departmental group Future costs £m	31 March 2025 Departmental group Total costs £m	31 March 2024 Departmental group Historic costs £m	31 March 2024 Departmental group Future costs £m	31 March 2024 Departmental group Total costs £m
Balance at 1 April	1,048	2,863	3,911	1,164	3,297	4,461
Increase/(decrease) in the year	-	(136)	(136)	(33)	(33)
Unwinding of discount	-	58	58	-	29	29
Amortisation	(118)	-	(118)	(116)	-	(116)
Release in year	-	(301)	(301)	-	(430)	(430)
Balance at 31 March	930	2,484	3,414	1,048	2,863	3,911

£74m (31 March 2024: £73m) of the future costs balance relates to costs which do not form part of the nuclear provisions and are offset by payments on account. The historic costs within the above are deemed contract assets under IFRS 15 ‘Revenue from Contracts with Customers’. The opening balances, amortisation in period and closing balances for each main contract type are shown below.

	31 March 2025 Departmental group Spent fuel reprocessing and associated waste management £m	31 March 2025 Departmental group Spent fuel receipt and management £m	31 March 2025 Departmental group Total £m	31 March 2024 Departmental group Spent fuel reprocessing and associated waste management £m	31 March 2024 Departmental group Spent fuel receipt and management £m	31 March 2024 Departmental group Total £m
Balance at 1 April	672	376	1,048	726	438	1,164
Amortisation	(51)	(67)	(118)	(54)	(62)	(116)
Balance at 31 March	621	309	930	672	376	1,048

Contract assets under IFRS 15 are deemed financial instruments for the purposes of IFRS 9 ‘Financial Instruments’ and, therefore, are ordinarily required to be reviewed for expected credit loss impairment. The above contract asset balances comprise costs which have been previously incurred and are now being amortised in each reporting period. They are not related to or dependent on the future payments still to be made under each contract and therefore a credit loss impairment is not required.

14. Investments in joint ventures and associates

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	-	921	-	938
Dividends	-	(84)	-	(86)
Profit/(loss)	-	77	-	73
Revaluations	-	1	-	(4)
Balance at 31 March	-	915	-	921

Urenco:

Urenco is an international supplier of enrichment services. The department holds 33% (31 March 2024: 33%) of the ordinary share capital through Enrichment Holdings Limited. The department accounts for its investment in Urenco as an associate using the equity method. At 31 March 2025, the departmental group’s holding is valued at £776m (31 March 2024: £819m).

Urenco’s group financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and IFRS as issued by the IASB. The financial statements are prepared to 31 December and are presented in euros.

The principal place of business is Bells Hill, Stoke Poges, Buckinghamshire.

Summarised financial information	2024‑25 £m	2023‑24 £m
Non-current assets	5,349	5,126
Current assets	2,121	2,466
Current liabilities	(585)	(934)
Non-current liabilities	(4,431)	(4,073)
Revenue	(1,590)	(1,672)
Income tax expense	-	69
(Profit)/loss from continuing activities	(153)	(235)

Other financial information	2024‑25 £m	2023‑24 £m
Cash and cash equivalents	795	767
Current financial liabilities (excluding trade and other payables and provisions)	(129)	(511)
Non-current liabilities (excluding trade and other payables, provisions and deferred tax liabilities)	(834)	(778)
Depreciation and amortisation	372	404
Interest income	(144)	(108)
Interest expense	189	189

Other:

There are other joint ventures and associates which are not material and further information can be found in the financial statements of UKAEA.

15. Trade and other receivables

	2024‑25 Core department £m	2024‑25 Departmental group £m	2023‑24 Core department £m	2023‑24 Departmental group £m
Amounts falling due within 1 year
Trade receivables	46	219	134	215
Other receivables:
- VAT and other taxation	13	321	33	310
- Staff receivables	1	1	1	1
- Other	77	206	208	341
Contract assets	-	84	-	33
Prepayments and accrued income	52	173	100	204
Total	188	1,005	476	1,104
Amounts falling due after more than 1 year
- Trade receivables	-	49	-	52
- Other receivables	335	372	219	225
Prepayments and accrued income	6	329	6	36
Total	341	750	225	313
Total receivables at 31 March	529	1,755	701	1,417

Core department:

Within other receivables due after more than 1 year was £334m (2023–24: £220m) relating to the surplus sharing arrangement of the Mine Workers’ Pension Scheme (MPS).

The Mineworkers’ Pension Scheme was guaranteed by the government after privatisation of the British Coal Corporation in 1994. The agreement relating to the guarantee entitles the government to a portion of any periodic valuation surpluses as determined by the Government Actuary’s Department.

In October 2024 the government announced a review of the MPS surplus sharing arrangement. The review is on-going and until concluded, the department will not seek to collect any of the reported receivable.

16. Cash and cash equivalents

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	1,025	2,737	1,098	2,083
Net change in cash and cash equivalent balances	(320)	(143)	(73)	654
Balance at 31 March	705	2,594	1,025	2,737
The following balances were held at: The Government Banking Service (GBS)	471	1,600	884	1,835
The following balances were held at: Commercial banks and cash in hand	234	994	142	902
Balance at 31 March	705	2,594	1,025	2,737

17. Trade payables and other liabilities

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Amounts falling due within 1 year
VAT, social security and other taxation	10	119	22	118
Trade payables	28	237	122	399
Other payables	89	1,037	470	1,131
Contract liabilities (see note 17.1)	-	658	-	758
Other accruals and deferred income	3,137	4,438	3,048	4,355
Amounts issued from the Consolidated Fund for supply but not spent at year end	667	667	1,025	1,025
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: Received	38	24	-	136
Total	3,969	7,180	4,687	7,922
Amounts falling due after more than 1 year
Trade payables	-	16	-	22
Contract liabilities (see note 17.1)	-	1,444	-	1,261
Other payables, accruals and deferred income	1	546	-	57
Total	1	2,007	-	1,340
Total payables at 31 March	3,970	9,187	4,687	9,262

17.1 Contract liabilities

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Balance at 1 April	-	2,019	-	2,173
Additions	-	250	-	254
Change in measurement	-	786	-	317
Release to SoCNE	-	(952)	-	(725)
Balance at 31 March	-	2,102	-	2,019
Of the total: Due within 1 year	-	658	-	758
Of the total: Due in over 1 year	-	1,444	-	1,261
Balance at 31 March	-	2,102	-	2,019

The above tables include promissory note liabilities of £1,919m at 31 March 2025 (31 March 2024: £1,940m). These relate to various ODA (official development assistance) programmes to which the department has contributed.

Other accruals and deferred income amounts falling due within 1 year include £598m (31 March 2024: £519m) for Renewable Heat Incentive schemes.

Departmental group:

The majority of contract liabilities are the sums received on account by the Nuclear Decommissioning Authority relating to income from long term contracts to be recognised within 1 year of £658m (31 March 2024: £758m) and after 1 year of £1,426m (31 March 2024: £1,261m).

These are payments received on account which relate to amounts which customers have paid NDA for the provision of services under long-term contracts. These payments will be recognised as income when the services are provided. Payments received on account are shown net after deduction of any applicable recoverable contract costs. Payments on account not yet recognised as revenue are adjusted for inflation each year (known as revalorisation).

18. Lease liabilities

	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Land
Not later than 1 year	-	4	-	1
Later than 1 year and not later than 5 years	-	19	-	4
Later than 5 years	-	66	-	16
Total	-	89	-	21
Less interest element	-	(16)	-	(3)
Present value of obligations	-	73	-	18
Buildings
Not later than 1 year	9	18	5	9
Later than 1 year and not later than 5 years	35	60	31	45
Later than 5 years	151	197	143	190
Total	195	275	179	244
Less interest element	(64)	(89)	(56)	(60)
Present value of obligations	131	186	123	184
Other
Not later than 1 year	3	6	4	6
Later than 1 year and not later than 5 years	1	4	4	6
Present value of obligations	4	10	8	12
Total present value of obligations	135	269	131	214
Current	12	28	9	18
Non-current	123	241	122	196

Lease liability – additional analysis	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Interest on lease liabilities	5	9	4	7
Income of sub-leasing right-of-use assets	-	3	-	-
Expenses relating to short-term liabilities	-	6	-	4
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	-	1	-	1

19. Provisions for liabilities and charges

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Current liabilities
Not later than 1 year	-	215	4,591	342	4,427
Total current liabilities	-	215	4,591	342	4,427
Non-current liabilities
Later than 1 year and not later than 5 years	-	664	16,710	734	16,662
Later than 5 years	-	606	93,068	671	88,168
Total non-current liabilities	-	1,271	109,777	1,405	104,830
Total at 31 March	-	1,485	114,369	1,747	109,257
Total provisions
Nuclear	19.1	1,061	112,043	1,104	106,866
Other	19.2	424	2,326	644	2,392
Total at 31 March	-	1,485	114,369	1,747	109,257

The provision liabilities have been discounted to present value using discount rates as provided by HM Treasury.

Discounting as at 31 March 2025 and 31 March 2024 has been applied to nominal cash flows which include allowance for future inflation using a forecast of consumer price inflation provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions.

The impact of the change in the discounting approach is included in the ‘change in discount rate’ movement of provisions.

	31 March 2025 Nominal discount rate	31 March 2025 Inflation rate	31 March 2025 Equivalent real discount rate	31 March 2024 Nominal discount rate	31 March 2024 Inflation rate	31 March 2024 Equivalent real discount rate
Cash outflows expected within 2 years	4.03%	2.60%	1.39%	4.26%	3.60%	0.64%
Cash outflows expected between 2-5 years	4.07%	2.30%	1.73%	4.26%	1.80%	2.19%
Cash outflows expected between 5-10 years	4.81%	2.30%	2.45%	4.03%	2.00%	2.87%
Cash outflows expected after 10 years	4.55%	2.50%	2.50%	4.72%	2.00%	2.35%

Allowances for future inflation and discounting can impact on reported liabilities significantly; uninflated, undiscounted equivalent values are provided in the descriptions of the provisions below to illustrate the effect.

19.1 Nuclear provisions

	British Energy £m	UK Atomic Energy Authority Decommissioning £m	Core department Total £m	NDA Decommissioning £m	Contract loss £m	Departmental group £m	Total £m
Balance at 1 April 2023	420	763	1,183	125,165	-	126,348
Net amount deducted from recoverable contract costs	-	-	-	-	4	4
Unwinding of discount	7	3	10	1,390	(7)	1,393
Change in discount rate	6	(70)	(64)	(26,318)	1	(26,381)
Provided in the year	22	80	102	9,163	-	9,265
Provisions not required written back	-	-	-	-	8	8
Provisions utilised in the year	(99)	(28)	(127)	(3,638)	(6)	(3,771)
Balance at 31 March 2024	356	748	1,104	105,762	-	106,866
Net amount deducted from recoverable contract costs	-	-	-	-	(7)	(7)
Unwinding of discount	4	16	20	2,565	-	2,585
Change in discount rate	3	(5)	(2)	1,361	-	1,359
Provided in the year	14	57	71	5,280	23	5,374
Provisions not required written back	-	-	-	(302)	-	(302)
Provisions utilised in the year	(85)	(47)	(132)	(3,697)	(4)	(3,833)
Balance at 31 March 2025	292	769	1,061	110,969	12	112,043

Core department:

British Energy: As a result of the restructuring of British Energy (BE) in January 2005, the UK government assists BE (now EDF Energy Nuclear Generation Limited) in meeting its contractual historic fuel liabilities. The provision is based on the forecast payment schedule up to 2029 which is set out in the waste processing contracts agreed between BE, BNFL and the core department. The discounted liability at 31 March 2025 is £292m (31 March 2024: £356m). Payments are adjusted in line with the Retail Prices Index and the liability includes allowance for future inflation based on a forecast for the Index published by the Office for Budget Responsibility. The undiscounted liability at 31 March 2025, at prices as at the reporting date excluding the impact of future inflation, is £292m (31 March 2024: £367m restated).

UK Atomic Energy Authority (UKAEA) Decommissioning: The provision represents the estimated costs of decommissioning the Joint European Torus facility at UKAEA’s Culham site, including the storage, processing and eventual disposal of radioactive wastes. The core department retains the liability for these costs. Cost estimates in the detailed Life Time Plan for decommissioning are reviewed annually and include an element of uncertainty given that much of the work will not be undertaken until well into the future. The discounted liability at 31 March 2025 is £769m (31 March 2024: £748m); the undiscounted liability at 31 March 2025, at prices as at the reporting date so excluding the impact of future inflation, is £887m (31 March 2024: £864m).

Departmental group

NDA Decommissioning: The NDA’s nuclear decommissioning liability represents NDA’s best estimate of the costs of decommissioning plant and equipment on each of the designated nuclear licensed sites in accordance with the published strategy. The programme of decommissioning work will take until 2137 but, in preparing the estimate, the NDA has focused on the first 20 years.

The estimates are based on assumptions about the processes and methods likely to be used to discharge the obligations and reflect the latest technical knowledge, existing regulatory requirements, UK government policy and commercial agreements. Given the very long timescale and the complexity of the plants and material being handled, considerable uncertainty remains in the cost estimate, particularly in the later years. Discounting of the forward cash flow estimates to present value also has a significant impact on the liability reported in the Statement of Financial Position of £110bn at 31 March 2025 (31 March 2024: £105bn). The undiscounted equivalent of this reported liability is £216bn at 31 March 2025 (31 March 2024: £199bn).

Where elements of the NDA’s decommissioning provision are subject to reimbursement under contractual agreements with third parties, the associated recoverable amounts are recognised as recoverable contract costs. These are recognised as separate assets when it is virtually certain that the recovery will occur and are measured on a basis consistent with the related provision.

Amounts recognised as recoverable contract costs are presented separately from provision balances and are not netted off against the related liabilities in the Statement of Financial Position. This accounting treatment reflects the separate recognition of obligations and rights under I A S 37 and ensures a transparent view of gross liabilities and related recoveries. The presentation is applied consistently across reporting periods.

As part of the preparation of the financial statements, the principal assumptions and sensitivities for the cost estimates have been updated and reviewed by the NDA executive and, where appropriate, updates to the estimates have been made to reflect changed circumstances and more recent knowledge. The key aspects of the basis of estimate are set out below:

The nuclear provision estimate for each reporting segment is based initially on the lifetime plan for each site or programme of work managed within the segment, with specific adjustments as required by the nature of each site or programme to ensure that the estimate is kept up to date and compliant with accounting requirements
The site lifetime plans and equivalent figures are based on P50 estimates, meaning there is a 50% probability of the outcome being either under or over the estimate. While alternative bases of estimate could be used, the P50 basis is believed by management to produce a representative single point estimate for disclosure in the financial statements. Alternative calculation techniques may produce materially different results
The nuclear provision estimate is stated in money values at the reporting date. The site lifetime plans are stated in mid-year money values (namely the September preceding the reporting date). The Authority applies an inflationary adjustment to produce the estimate as at the reporting date. The adjustment is based on the change in price levels specific to each component of the estimate where this is known or can be reasonably estimated
The nuclear provision estimate is discounted using discount rates published by HM Treasury each year. The Authority applies discounting on a mid-year basis to reflect the nature of its expenditure, namely that it occurs throughout each reporting period rather than at the end of each reporting period

The valuation of long-term provisions, particularly within the NDA, involves significant estimation uncertainty and the application of management judgement. Assumptions include the expected cost and duration of decommissioning activity, discount and inflation rates, regulatory developments, and technological change. Estimates are prepared using updated site lifetime plans and reflect the best available knowledge, including actuarial and engineering input where appropriate. The N D A uses a P50 basis to derive its provision estimates, meaning there is an equal likelihood that actual outcomes may be higher or lower than the reported figures. These uncertainties are inherent in provisions of this nature, especially those with durations extending to 2137.

The value of the NDA’s nuclear decommissioning provision is inherently sensitive to a number of key assumptions, including discount rates, inflation, cost escalation factors, and the expected timing and scope of decommissioning activities. These assumptions are reviewed regularly and reflect the best available information, including long-term economic forecasts and site-specific planning data. The long duration and complexity of the programme mean that the liability may vary over time as assumptions are updated or revised in response to external or operational changes.

The NDA has commercial agreements in place under which a portion of the expenditure required to settle certain elements of the decommissioning provision are recoverable from third parties. Changes in future cost estimates of discharging these particular elements are therefore matched by a change in recoverable contract costs. In accordance with I A S 37, these recoverable amounts are not offset against the decommissioning provision but are treated as a separate asset (note 13).

Sensitivity analysis: The NDA also considers credible risks and opportunities which may increase or decrease the cost estimate, but which are deemed less probable than the best estimate. These are the basis of the sensitivities identified below, which are illustrative estimates of potential upper and lower outcomes, but which do not measure the probability associated with those outcomes.

Component and key sensitivities	Lower end of range	Upper end of range
Sellafield: Principal sensitivities relate to the cost of delivering the plan, particularly the costs of new construction, decommissioning and post operational clean out (POCO) work in the long-term (beyond the next 20 years).	£7,162m reduction (50% reduction in the costs of the most uncertain elements of expenditure beyond the first 20 years)	£42,969m increase (300% increase in the costs of the most uncertain elements of expenditure beyond the first 20 years)
Nuclear Restoration Services: Principal sensitivities relate to the required duration and cost of decommissioning, and the consequential impact on the costs of long-¬term management of the sites.	£2,417m reduction (10% variance in costs)	£2,417m increase (10% variance in costs)
Nuclear Waste Services (costs of GDF): Key sensitivities are in the timing and costs of constructing and operating the GDF, dependent on the location and construction requirements of the facility.	£1,437m reduction (50% reduction in the costs of the most uncertain elements of expenditure beyond the first 20 years)	£8,621m increase (300% increase in the costs of the most uncertain elements of expenditure beyond the first 20 years)
Nuclear Waste Services (other services): Key sensitivities are in the timing and costs of completing waste management operations and decommissioning work, at the LLW Repository, Springfields and Capenhurst.	£188m reduction (10% variance in costs)	£94m (5% variance in costs)
Nuclear Transport Solutions): Key sensitivities are in the timing and costs of completing waste management operations and decommissioning work, at the LLW Repository, Springfields and Capenhurst.	£7m reduction (10% variance in costs)	£3m increase (10% variance in costs)
	# Total	£11,211m reduction	£54,104m increase

Undiscounted movements – NDA nuclear provision

	Sellafield £m	NRS £m	NWS £m	NTS £m	2025 Total £m
Opening balance	135,508	47,513	15,797	80	198,898
Net movements	15,653	1,059	337	7	17,056
Closing Balance	151,161	48,572	16,134	87	215,954

Further details are reported in the N D A’s annual report and accounts.

19.2 Other provisions

	Concessionary fuel £m	Energy Schemes £m	Legacy ailments £m	Other £m	Core department total £m	Coal Authority £m	Early departure costs and restructuring £m	Other £m	Departmental Group total £m
Balance at 1 April 2023	361	3,301	168	201	4,031	2,211	56	12	6,310
Change in discount rate	(26)	-	(18)	(1)	(45)	(875)	3	-	(917)
Provided in the year	2	83	26	17	128	246	-	78	452
Provisions not required written back	-	-	-	(31)	(31)	-	(2)	-	(33)
Provisions utilised in the year	(40)	(3,277)	(13)	(114)	(3,444)	(45)	(6)	(2)	(3,497)
Unwinding of discount	3	-	1	1	5	71	1	-	76
Balance at 31 March 2024	300	107	164	73	643	1,608	52	88	2,391
Balance at 1 April 2024	300	107	164	73	643	1,608	52	88	2,391
Change in discount rate	(2)	-	(1)	-	(3)	(60)	1	(12)	(74)
Provided in the year	2	-	-	4	6	143	(7)	95	237
Provisions not required written back	-	(61)	(46)	-	(107)	-	1	-	(106)
Provisions utilised in the year	(36)	(45)	(10)	(34)	(125)	(54)	-	(26)	(205)
Unwinding of discount	6	-	3	1	10	72	1	-	83
Balance at 31 March 2025	270	1	110	44	424	1,709	48	145	2,326

Core department:

Energy schemes: The provision covered the cost to the core department relating to the Energy Bills Discount Scheme (EBDS).

On 9 January 2023, the government announced the Energy Bills Discount Scheme which came into force on the 26 April 2023. The scheme was designed to support businesses with high energy costs and it ran until 31 March 2024. Claims windows remained open in the 2024-25 financial year, creating a future obligation for the department and hence the recognition of a provision in the 2023 24 annual report.

The value of the provision was based on the difference between total forecasted scheme spend and expenditure recognised to date, which gave a total liability of £107m at 31 March 2024.

This provision was utilised in 2024-25 against any expenditure incurred in-year, with the remainder being written back as not required, leaving a closing liability of £nil at 31 March 2025.

Concessionary fuel: The provision covers the cost of the core department’s responsibility, arising from government announced guarantees, to provide either solid fuel or a cash alternative to ex-miners formerly employed by British Coal and their dependants and to certain former employees who lost their entitlement as a consequence of the restructuring and run down of U K Coal in 2013 and 2015; it includes administration costs.

Of the total of 22,849 beneficiaries at 31 March 2025, 20,234 have opted for the cash alternative at an average cost per beneficiary of £1,332 per annum; the average annual cost of solid fuel for the remainder is £2,110 per beneficiary excluding delivery costs and VAT.

The provision is based on standard female mortality rates and assumes beneficiaries will continue to switch their entitlement from solid fuel to cash in line with rates observed in the recent past. Costs are expected to be incurred up to 2082. The discounted liability as at 31 March 2025 is £270m (31 March 2024: £300m); the undiscounted liability as at 31 March 2025, at prices as at the reporting date so excluding the impact of future inflation, is £308m (31 March 2024: £342m).

Legacy ailments: The provision is an estimate of the cost to the core department of future personal injury compensation claims relating to:

Former British Coal mineworkers who suffered personal injuries between 1947 and 1994. Responsibility for payment of compensation transferred to the department on 1 January 1998 by a restructuring scheme under the Coal Industry Act 1994. The discounted liability as at 31 March 2025 is £110m (31 March 2024: £164m). The undiscounted liability, at prices as at the reporting date so excluding the impact of future inflation, is £130m (31 March 2024: £197m). The estimate is based on forecasts of settlement of claims, taking account of discussion with the department’s legal advisors and claim handlers and recent actuarial estimates. The current estimate is that liabilities will extend up to 2050.

The estimates include legal and administrative costs and are subject to some uncertainty.

Departmental group:

Mining Remediation Authority: The provision for liabilities and charges at 31 March 2025 is £1,709m (2024: £1,611m). Forecasted cash flows, which reflect our latest assumptions, included within this provision before inflation and discounting are forecast at £4,060m (2024: £3,733m), an increase of £327m. This increase is predominantly driven by mine water scheme costs.

As at 31 March 2025, the provision consists of:

Responsibilities for mine water treatment: £1,238m (2024 £1,198m)
Public safety and subsidence: £324m (2024 £271m)
Subsidence pumping stations: £93m (2024 £87m)
Other property related provisions also exist amounting to £55m (2024 £55m).

NDA: Restructuring provisions have been recognised in NDA to cover continuing annual payments to be made under early retirement arrangements to individuals working for subsidiaries who retired early, or had accepted early retirement, before 31 March 2025. The provision is calculated using U K life expectancy estimates published by the Office of National Statistics and is subject to the uncertainty inherent in those estimates.

Contract loss provisions have been recognised in NDA to cover the anticipated shortfall between total income and total expenditure on relevant long-term contracts. The amounts are disclosed net after deduction of amounts relating to recoverable contract costs.

Provisions for potential insurance claims and maintenance requirements have also been made.

20. Retirement benefit obligations

The departmental group consolidates 8 defined benefit pension arrangements from its designated bodies including:

Nuclear Decommissioning Authority (NDA)
Nuclear site licence companies (SLCs)

All schemes are accounted for in accordance with IAS 19 ‘Employee Benefits’. They are subject to the UK regulatory framework and under the scope of the scheme specific funding requirement. The schemes’ trustees are responsible for operating these defined benefit plans and have a statutory responsibility for ensuring the schemes are sufficiently funded to meet current and future benefit payments.

Defined benefit scheme liabilities expose the departmental group to material financial uncertainty, arising from factors such as changes in life expectancy and in the amount of pensions payable. Some scheme investments, such as equities, should offer long-term growth in excess of inflation, but can be more volatile in the shorter term than government bonds.

The details of each scheme are discussed below.

Nuclear Decommissioning Authority (NDA)

Two defined benefit pension schemes relate to the NDA – the Closed and Nirex sections of the Combined Nuclear Pension Plan (CNPP). Both are closed to new entrants. The actuaries rolled forward the results to determine approximate positions as at 31 March 2025.

As at 31 March 2025, the weighted average duration of the combined schemes is 12.5 years.

Further details regarding the nature of the benefits provided, regulatory framework, actuarial assumptions, sensitivity analysis, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the accounts of NDA.

Nuclear site licence companies (SLCs)

There are 6 defined benefit final salary pension schemes relating to the 4 SLCs comprising:
1. a. The NWS Ltd section of the CNPP
2. b. The NRS section of the Electricity Supply Pension Scheme (ESPS) and CNPP
3. c. The Group Pension Scheme section of the CNPP and the Sellafield section of the GPS
4. d. The Dounreay Section of the CNPP

All are closed to new entrants. The actuaries rolled forward the results to determine approximate positions as at 31 March 2025.

Further details regarding the nature of the benefits provided, regulatory framework, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the CNPP Statement of Investment Principles at www.cnpp.org.uk/document-library/, and in the Electricity Supply Pension Scheme’s Annual Reports at www.espspensions.co.uk/#useful-documentation.

	31 March 2025 Funded pension schemes £m	31 March 2024 Funded pension schemes £m
Present value of defined benefit obligation at 1 April	4,698	4,463
Interest cost	215	206
Current service cost	95	110
Benefits paid, transfers in and expenses	(214)	(201)
Actuarial (gains)/losses on defined benefit obligation due to demographic assumptions	(6)	(79)
Actuarial (gains)/losses in financial assumption	(632)	(68)
Actuarial (gains)/losses arising from experience adjustments	10	250
Employee contributions	20	17
Present value of defined benefit obligation at 31 March	4,186	4,698
Fair value of assets at 1 April	5,361	5,383
Expected return on plan assets	246	249
Employer contributions	116	125
Benefits paid, transfers in and expenses	(214)	(201)
Actuarial gains/(losses)	(357)	(212)
Employee contributions	20	17
Fair value of assets at 31 March	5,172	5,361
Net (asset)/liability at 31 March	(986)	(663)

The combined net asset value has increased to £986m as 31 March 2025 (£663m 31 March 2023). This is primarily due to significant movements in actuarial gains and changes in the discount rate applied to all defined benefit obligations between 31 March 2024 and 31 March 2025.

Net (asset)/liability by scheme

	31 March 2025 Present value of defined benefit obligation £m	31 March 2025 Fair value of assets £m	31 March 2025 Net liability/ (asset) £m	31 March 2024 Present value of defined benefit obligation £m	31 March 2024 Fair value of assets £m	31 March 2024 Net liability/ (asset) £m
NWS CNPP^{[note a]}	31	40	(9)	35	39	(4)
NRS ESPS^{[note b]}	1,863	2,083	(220)	2,132	2,306	(174)
NRS CNPP^{[note a]}	122	155	(33)	132	151	(19)
Sellafield GPS	412	567	(155)	463	595	(132)
Sellafield CNPP	1,524	2,051	(527)	1,698	1,997	(299)
Dounreay CNPP	133	160	(27)	145	156	(11)
NDA^{[note a]}	101	116	(15)	93	117	(24)
Total net (asset)/liability at 31 March	4,186	5,172	(986)	4,698	5,361	(663)

Pension scheme assets are recognised to the extent that they are recoverable and pension scheme liabilities are recognised to the extent that they reflect a constructive or legal obligation. The accounting judgements applied in recognising net assets for each pension scheme are summarised below:

(a) Accounting surpluses in respect of NDA and NDA Group businesses’ participation in the non-GPS Sections of the CNPP can be recognised as an asset because the employers have an unconditional right to a refund of surplus

(b) The principal employer (with any other participating employer in respect of the relevant section) has an unconditional right to a refund of surplus

Asset allocation

	31 March 2025 £m	31 March 2024 £m
Equities	1,077	1,369
Property	596	676
Government bonds	985	667
Corporate bonds	359	338
Other growth assets	743	804
Other	1,412	1,507
Balance at reporting date	5,172	5,361

As at 31 March 2025, the N R S schemes had a total asset balance of £2,237m (31 March 2024: £2,455m), of which £38m (31 March 2024: £30m) are government bond assets, £295m (31 March 2024: £349m) are other growth assets which are not quoted in an active market, £355m (31 March 2024: £362m) are property assets and £162m (31 March 2024: £171m) are corporate bonds.

The Sellafield schemes had £2,617m at 31 March 2025 (31 March 2024: £2,592m) of total assets, the majority of which, excluding the amount held in the Trustees’ bank account and some private equity investments due to their illiquid nature, had a quoted market value in an active market.

Expected contribution over the next accounting period

It is possible that the actual amount paid might be different to the estimated amount. This may be due to contributions, benefits payments or pensionable payroll differing from expected amounts, changes to scheme benefits or settlement/curtailment events that are currently unknown.

Major actuarial assumptions for SLC schemes

	Dounreay 2024‑25	Dounreay 2023‑24	NWS 2024‑25	NWS 2023‑24	NRS (ESPS) 2024‑25	NRS (ESPS) 2023‑24	NRS (CNPP) 2024‑25	NRS (CNPP) 2023‑24	Sellafield (CNPP) 2024‑25	Sellafield (CNPP) 2023‑24	Sellafield (GPS) 2024‑25	Sellafield (GPS) 2023‑24
Discount rate	5.7%	4.8%	5.7%	4.8%	5.7%	4.7%	5.7%	4.8%	5.7%	4.8%	5.7%	4.8%
Inflation (Retail Price Index)	3.1%	3.1%	3.1%	3.1%	3.2%	3.3%	3.2%	3.1%	3.1%	3.1%	3.2%	3.2%
Life expectancy at 65, currently aged 65 (male)	20.7	20.7	20.7	20.7	21.8	21.8	20.7	20.7	20.7	20.7	20.7	20.7
Life expectancy at 65, currently aged 45 (male)	22.0	22.0	22.0	22.0	22.4	22.4	22.0	22.0	22.0	22.0	22.0	22.0
Life expectancy at 65, currently aged 65 (female)	23.3	23.3	23.3	23.3	23.8	23.7	23.3	23.3	23.3	23.3	23.3	23.3
Life expectancy at 65, currently aged 45 (female)	24.7	24.7	24.7	24.7	24.6	24.5	24.7	24.7	24.7	24.7	24.7	24.7
Life expectancy at 60, currently aged 60 (male)	25.2	25.3	25.2	25.3	26.3	26.3	25.2	25.3	25.2	25.3	25.2	25.3
Life expectancy at 60, currently aged 40 (male)	26.8	26.8	26.8	26.8	27.2	27.2	26.8	26.8	26.8	26.8	26.8	26.8
Life expectancy at 60, currently aged 60 (female)	28.1	28.1	28.1	28.1	28.5	28.5	28.1	28.1	28.1	28.1	28.1	28.1
Life expectancy at 60, currently aged 40 (female)	29.6	29.6	29.6	29.6	29.4	29.3	29.6	29.6	29.6	29.6	29.6	29.6

Major actuarial assumptions for NDA

	Nuclear Decommissioning Authority (Closed) 2024‑25	Nuclear Decommissioning Authority (Closed) 2023‑24	Nuclear Decommissioning Authority (Nirex) 2024‑25	Nuclear Decommissioning Authority (Nirex) 2023‑24
Discount rate	5.65%	4.75%	5.65%	4.75%
Inflation (Retail Price Index)	3.15%	3.20%	3.20%	3.20%
Life expectancy at 65, currently aged 65 (male)	20.71	20.75	20.70	20.70
Life expectancy at 65, currently aged 45 (male)	21.99	22.02	22.00	22.00
Life expectancy at 65, currently aged 65 (female)	23.3	23.25	23.30	23.30
Life expectancy at 65, currently aged 45 (female)v 24.7	24.67	24.70	24.70
Life expectancy at 60, currently aged 60 (male)	25.21	25.26	25.20	25.30
Life expectancy at 60, currently aged 40 (male)	26.81	26.83	26.80	26.80
Life expectancy at 60, currently aged 60 (female)	28.14	28.09	28.10	28.10

Sensitivity analysis

The table shows the increase in liability that would result from changes in these actuarial assumptions:

	Dounreay £m	NWS £m	NRS £m	Sellafield £m	NDA £m
1 percentage point decrease in annual discount rate	-	-	-	-	-
1 percentage point increase in inflation assumption	-	-	-	-	-
0.5 percentage point decrease in annual discount rate	11	3	125	169	6
0.5 percentage point increase in inflation assumption	11	3	97	169	6
1 year increase in life expectancy	2	1	68	36	1

21. Capital and other commitments

Total minimum payments for capital and other commitments.

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
Contracted capital commitments	21.1	7	1,029	3	301
Other financial commitments	21.2	446	8,308	556	655
Total	-	453	9,337	559	956

21.1 Capital commitments

Contracted capital commitments not otherwise included in these financial statements:

	Note	31 March 2025 Departmental group £m	31 March 2024 Departmental group £m
Property, plant and equipment	-	1,017	299
Intangible assets	-	12	2
Total	-	1,029	301

Departmental group:

Capital commitments as at 31 March 2025 include purchase commitments of £694.3m, letters of credit issued via BNP Paribas and HSBC of £56.8m and future residential compensation obligation estimated by management to be £24.3m, all in respect of construction activities related to the development of the Sizewell C nuclear plant.

21.2 Other financial commitments

The financial commitments payable in future years include payments due under non-cancellable contracts to the organisations below.

Organisation	Note	Within 1 year £m	Later than 1 year and not later than 5 years £m	Later than 5 years £m	Total 31 March 2025 £m	Total 31 March 2024 £m
Various suppliers	-	45	2	-	47	131
Other	-	54	57	7	118	110
International subscription – IAEA	-	15	65	88	168	203
International subscription – Other	-	10	42	61	113	112
Total core department	-	124	166	156	446	556
East Suffolk and Suffolk County Councils	-	-	-	142	142	99
Net Zero Teesside	-	-	-	7,720	7,720	-
Total departmental group	-	124	166	8,018	8,308	655

Core department:

The core department has entered into contractual commitments with various suppliers in relation to the Net Zero Innovation Programme and Energy Innovation Programme, which provide funding for low-carbon technologies and systems to tackle climate change.

The core department is responsible for paying in the UK’s annual subscriptions to the International Atomic Energy Agency (IAEA). The IAEA is the U N-affiliated organisation responsible for ensuring the safe, secure and peaceful use of civil nuclear technologies, through monitoring nuclear safeguards, setting international standards and guidance for nuclear safety and security promoting nuclear applications for development.

Departmental group:

The departmental group has entered into non-cancellable contracts (which are not leases, PFI contracts or other service concession arrangements) arising from Sizewell C Limited’s commitments of £142m under the Deed of Obligation.

On the 8 October 2021, East Suffolk Council, Suffolk County Council and NNB Generation Company Limited (now Sizewell C Limited) entered into a Deed of Obligation (DoO) pursuant to section 1 of the Localism Act 2011 and section 111 of the Local government Act 1972. The DoO related to all aspects of the Sizewell C project and outlines a number of payments that SZC is required, or could be required, to make to the Councils/ funding for Suffolk communities throughout the construction phase of the project, to mitigate the impacts of construction.

The departmental group entered into a Dispatchable Power Agreement (DPA) with Net Zero Teesside Power Limited (East Cost Cluster) on 19 November 2024. DPA includes an Availability Payment mechanism, which compensates the generator for maintaining the availability of its facility to generate electricity and capture CO₂, regardless of whether the facility is actively dispatching power. No liability has been recognised in the financial statements as at the reporting date, but the DPA represents a firm commitment by the departmental group to provide the Availability Payment once the generator has performed their obligations. The estimated future exposure is £7.72bn.

22. Financial instruments

The carrying amounts of financial instruments in each of the IFRS 9 categories are shown below.

Financial assets:

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
At amortised cost
Cash and cash equivalents	16	705	2,594	1,025	2,737
Receivables (i)	15	459	847	562	835
Loans to public sector bodies (ii) & (iii)	11.3	128	126	188	188
Other financial assets and private sector loans	12	70	70	70	70
Total financial assets at amortised cost	-	1,362	3,637	1,845	3,830
Elected at fair value through other comprehensive income (FVTOCI)
Ordinary shares in public sector companies (iv)	11.1	857	1,581	97	793
Other financial assets	12	43	43	40	40
Total financial assets elected at FVTOCI	-	900	1,624	137	833
Mandatory at fair value through profit or loss (FVTPL)
Derivatives – Contracts for Difference (CfD)	10.1	-	3,022	-	2,900
Derivatives – interest rate swaps	10	-	85	-	-
Loans to public sector bodies (ii) & (iii)	11.3	-	-	2,837	2,837
Other financial assets and private sector loans (vii)	12	172	172	148	148
Total financial assets mandatory at FVTPL	-	172	3,279	2,985	5,885

Financial liabilities:

	Note	31 March 2025 Core department £m	31 March 2025 Departmental group £m	31 March 2024 Core department £m	31 March 2024 Departmental group £m
At amortised cost
Payables (ii)	17	(117)	(1,290)	(591)	(1,553)
Total financial liabilities at amortised cost	-	(117)	(1,290)	(591)	(1,553)
Mandatory at fair value through profit or loss (FVTPL)
Derivatives – Contracts for Difference (CfD)	10	-	(93,427)	-	(92,051)
Derivatives – Green Hydrogen	10.2	-	(1,243)	-	-
Total financial liabilities mandatory at FVTPL	-	-	(94,670)	-	(92,051)
Designated at fair value through profit or loss (FVTPL)

Notes:
(i) The amounts disclosed above as payables and receivables exclude any assets or liabilities which do not arise from a contractual arrangement.
(ii) Loans to public sector bodies comprises the loans detailed in note 11.3.
(iii) Ordinary shares in public sector companies excludes bodies that are consolidated in the departmental group, as these are held at cost, see note 11.1.
(iv) Specific valuation techniques used to value financial instruments include:
1. – the fair value of public sector shares is based upon net assets and classified as level 2
2. – the fair value of the CfD and Green Hydrogen contracts has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term
3. – other techniques, such as discounted cash flow analysis or for non-quoted ordinary shares and investment funds that are not actively traded, the net assets of the company/ underlying fund are used – these are classified as level 3
The different levels are defined as:
1. – Level 1 – uses quoted prices (unadjusted) in active markets for identical assets or liabilities;
2. – Level 2 – uses inputs for the assets or liabilities other than quoted prices, that are observable either directly or indirectly;
3. – Level 3 – uses inputs for the assets or liabilities that are not based on observable market data, such as internal models or other valuation method.
(v) Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. There were no transfers between levels during the year.

Financial risk management

IFRS 7 ‘Financial Instruments: Disclosure’ requires the disclosure of information which will allow users of financial statements to evaluate the significance of financial instruments on the departmental group’s financial performance and position and the nature and extent of its exposure to risks arising from these instruments.

As the cash requirements of the departmental group are largely met through the estimates process, financial instruments play a more limited role in creating risk than would apply to a private sector body of a similar size.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Significant credit risks can be summarised below.

Core department

Investment funds and Loan portfolios: Investee companies may not perform as expected and the departmental group may not recover its initial investment. The core department minimises the risk by monitoring the overall performance of the funds and loan portfolios to secure value for the core department as an investor. This includes a full evaluation of each business case submitted prior to committing funds.

NDPBs and other designated bodies

Cash and cash equivalents: The departmental group held cash and cash equivalents of £2,594m as at 31 March 2025 (31 March 2024: £2,737m). The cash and cash equivalents are held with banks and financial institutions. The departmental group considers that cash and cash equivalents have a low credit risk based on the external credit ratings of the holding parties.

Credit risk rating and loss allowance

The departmental group has the following financial assets subject to the expected credit loss model:

trade receivables, contract assets, and lease receivables
loans, bonds, and term deposits
cash and cash equivalents

The credit risk and loss allowances have been insignificant for loans, bonds, term deposits, cash and cash equivalents.

Trade receivable, contract assets and lease receivables:

The core department applies the IFRS 9 simplified approach using an allowance matrix to measure the lifetime expected loss allowance for trade receivables in accordance with the FReM guidance.

Trade receivables are grouped based on credit risk characteristics and the number of past due days. Default is defined as 90 days past due date. The loss rates are estimated using the historic data for each aging group. Forward-looking information such as macroeconomic factors and entity specific situations are considered for entities with significant outstanding balances. Balances with other core central government departments are excluded from recognising stage-1 and stage-2 impairments following the FReM adaptions.

There were no material expected credit losses during the financial year.

Market risk

This is the risk that fair values and future cash flows will fluctuate due to changes in market prices. Market risk generally comprises of foreign currency risk, interest rate risk and other market risk. The departmental group undertakes very few foreign currency transactions and is not exposed to significant foreign currency risk.

The impact of interest rates affects the discount rate used to arrive at the fair value of the CfD and Green Hydrogen liabilities held by LCCC. Changes in interest rates which affect the discount rate would therefore affect the Statement of Financial Position valuation. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

The interest rate swaps held by NZNSSL are assumed to be highly sensitive to changes in future interest rates, which could result in either asset or liability position on the Statement of Financial Position. Given that the equity of NZNSSL is 100% owned by external parties, this will be offset by corresponding movement in the non-controlling interest balance and the share of profit or loss attributable to the non-controlling interest recorded on the Statement of Comprehensive Net Expenditure.

The departmental group is exposed to wider risks relating to the performance of the economy as a whole. The main risks resulting from a downward movement in the economy including failures of investee companies of investment funds, and loan defaults.

Inflation risk

The amounts payable under the CfD and Hydrogen Production Business Model contracts will be affected by the indexation of strike prices to reflect inflation and changes to wholesale electricity prices resulting from inflation. While inflation rates have seen an increase during the year, the group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

In common with other government departments, the financing of the departmental future liabilities is met by future grants of supply, annually voted for by Parliament. There is no reason to believe that future approvals will not be forthcoming, therefore, on this basis the liquidity risk to the core department is minimal.

The departmental group’s potential exposure to liquidity risk in relation to CfDs is mitigated by the funding arrangements under the legislation, that is LCCC has no obligation to pay the generators until it receives adequate funds from suppliers to perform its obligations. No payment is due under the The Hydrogen Production Business Model (HPBM) unless and until producers start hydrogen production in line with the terms of the Low Carbon Hydrogen Agreement (LCHA).

Commodity price risk

Commodity price risk is the risk or uncertainty arising from possible price movements. The amounts payable under the CfD and HPBM contracts are exposed to price risk through the fluctuations in future actual wholesale electricity prices, specifically, on how they will differ from the current forecast of future prices in the central scenario. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

23. Contingent liabilities

Core department – unquantifiable contingent liabilities

Deeds relating to the Mineworkers’ Pension Scheme and British Coal Staff Superannuation Scheme under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994:

Government guarantees were put in place on 31 October 1994, the day the schemes were changed, to reflect the impact of privatisation of the coal industry. They are legally binding contracts between the scheme Trustees and the Secretary of State for Energy Security and Net Zero. The guarantees ensure that benefits earned by scheme members during their employment with British Coal, and any benefit improvements from surpluses which were awarded prior to 31 October 1994, will always be paid and will be increased each year in line with the Retail Prices Index. If, at any periodic valuation, the assets of the Guaranteed Fund of either scheme were to be insufficient to meet its liabilities, the assets must be increased to bring the Fund back into balance. This is a long-term contingent liability dependent on the performance of the schemes’ investments and their mortality experience. Further details regarding the schemes can be found in note 15.

Indemnity to Public Appointment Assessors:

The Cabinet Secretary has provided a government-wide indemnity to Public Appointments Assessors (PAAs) against personal civil liabilities incurred in the execution of their PAA functions.

Compensation for exclusion from grant scheme:

The core department may become liable for funding the costs of compensation to certain claimants whose applications to the G B Non-Domestic Renewable Heat Incentive scheme had been rejected, following a court judgment that their applications for accreditation had not been processed in full accordance with scheme regulations.

Claims for judicial review:

A contingent liability exists in relation to claims for judicial review in relation to the transfer of the business of Bulb Energy Limited (in special administration). British Gas and E.ON were granted the permission to appeal the judgment of the High Court which found in favor of the department. The financial impact is dependent on the outcome of cases which currently cannot be reliably estimated.

Nuclear Liabilities Fund Shortfall:

The Nuclear Liabilities Fund was established in 1996 to meet certain costs of decommissioning 8 nuclear power plants in the U K that have been owned and operated by E D F Energy Nuclear Generation Limited since 2009. A constructive obligation was created in 2002 when the government undertook to underwrite the fund in respect of these liabilities to the extent that the assets of the fund might fall short; any surplus generated by the Fund would be paid over to the government once the liabilities have been met. The total undiscounted estimated liability as at 31 March 2025 of £27.2bn (31 March 2024: £26.7bn) has a present value of £13.6bn (31 March 2024: £13.5bn). The value of the fund as at 31 March 2025 is £20.5bn (31 March 2024: £20.7bn). It is not possible to quantify the extent to which the government may be obliged to contribute to the fund, nor any surplus that may arise, given the high level of uncertainty relating to estimation of decommissioning costs and investment returns on fund assets over a future period exceeding 100 years.

Departmental group – unquantifiable contingent liabilities

The departmental group has the following unquantifiable contingent liabilities. Other liabilities are disclosed in our arm’s length bodies’ accounts.

Mining Remediation Authority – Legal claims:

The Mining Remediation Authority is subject to various claims and legal actions in the ordinary course of its activities. Where appropriate, provisions are made in the accounts on the basis of information available and in accordance with guidance provided under the FReM and IFRS. The Mining Remediation Authority does not expect that the outcome of the above issues will materially affect its financial position.

Mining Remediation Authority – Restructuring scheme:

Where liabilities transferred under the various Coal Authority Restructuring Schemes (CARS) have crystallised due to planning conditions, agreements, claims etc, provision has been made in these financial statements. It has not, however, been possible to quantify contingent liabilities that may arise in the future. It is expected that any costs will be covered by future allocations of grant in aid.

Mining Remediation Authority – Subsidence damage and public safety liabilities:

Licensees of mining operations are required to provide security to the Mining Remediation Authority to cover the anticipated future costs of settling subsidence damage liabilities within their areas of responsibility. Outside the areas of responsibility of the holders of licences under Part II of the 1994 Act, the Mining Remediation Authority is responsible for making good subsidence damage. Where an area of responsibility is extinguished, this would transfer to the Mining Remediation Authority who would become responsible for the discharge of outstanding subsidence liabilities. The Mining Remediation Authority also has an ongoing liability to secure and keep secured the majority of abandoned coal mines. In all cases the liability for operating collieries is the responsibility of the licensees/ lessees and security is held to address those liabilities. The above liabilities have been provided for within the Public Safety and Subsidence provision based on analysis of trends and claims experience. However, it is possible that significant, unexpected events outside of this provision may materialise. It is expected that any deficit will be covered by future allocations of grant in aid.

Mining Remediation Authority – Mine water flooding incident, Skewen South Wales, January 2021:

The Mining Remediation Authority is aware of potential legal proceedings in respect of damage caused by the flooding event at Skewen. If the Mining Remediation Authority receive formal notification to commence legal proceedings, they will strongly defend their position.

Mining Remediation Authority – Treatment of inland saline water on the UK coalfields:

Recent analysis of the Mining Remediation Authority’s extensive monitoring of the Great Britain coalfields demonstrates that the chemistry of the mine water is extremely challenging and will require additional treatment to that normally undertaken.

At present, the levels of inland saline water in mine workings do not require extensive intervention, which is allowing time for detailed work to generate and evaluate the most cost effective and sustainable options for future treatment. Potential solutions may require significant additional costs to implement over the next decade and beyond at which point mitigating treatments will likely need to be in place. These could cost several hundreds of millions of pounds.

At the present time it is not possible to provide a sufficiently reliable estimate of the timing and quantum of the obligation for inclusion within the Mining Remediation Authority provisions balances. Work continues to better understand the nature and scale of the issue across the mine water blocks identified to be at risk and better understand when treatment will become necessary. This work will inform an outline business case which is currently expected by 2027.

CNPA – Legal claims:

There are a number of potential liabilities in respect of claims from employees. The timing and amount of any payment are uncertain. These liabilities have not been provided for as the CNPA believes that the claims are unlikely to be successful and unlikely to lead to a transfer of economic benefits.

CNPA – Site Closures:

CNPA monitors future service delivery as part of their Medium-Term Financial Planning programme. This includes reviewing any significant changes and the impact of those changes as at specific stage of the decommissioning cycle for each site, the CNPA will no longer be required to provide policing services for that site. The CNPA works with the nuclear industry partners on plans for individual site cessations. They do not commence cessation activities until they receive the formal 18 month notice from the nuclear industry partner. This is the point that they would consider any potential liabilities within the accounts.

Policing at each site can only be removed once the regulator, the Office for Nuclear Regulations (ONR) approves the status and approves changes to the site security plan.

CNPA is currently in a period of service change as the existing nuclear power stations cease to generate and are decommissioned over the coming years, however currently it is not possible to identify all potential costs. For this financial year this impacted 1 site which is:

Hunterston (Southwest Scotland): For the first of the sites being decommissioned (Hunterston), it has been confirmed by ONR that CNPA policing service will no longer be required from August 2025.

The uncertainty around the redeployment of the existing workforce to other CNC sites is ongoing and there is still significant uncertainty around how many officers will remain with the CNC and the Public Interest Transfer costs that maybe incurred over the two-year period following policing ceasing onsite, the cost to be incurred would be calculated on an individual’s circumstances for this two-year period.

In relation to the remaining sites currently being decommissioned, no specific decisions have been taken by the Site Operator or O N R in terms of likely cessation date and therefore 18-month notice has not been issues, therefore this does not give rise to quantifiable obligations.

NDA – Pension Schemes:

Whilst not the lead employer, the NDA is the lead organisation and has ultimate responsibility for certain nuclear industry pension schemes, including the Combined Nuclear Pension Plan and the Magnox section of the ESPS. Provisions for known deficits are included within Nuclear Provisions. However, movements in financial markets may adversely impact the actuarial valuations of the schemes, resulting in an increase in scheme deficits and consequent increase in nuclear provision.

NDA – Uranic Material:

At 31 March 2025, the NDA held inventories of reprocessed uranic material. These are potentially saleable materials, although there is currently no commercial demand and are held at nil value. Due to uncertainty over their future use, it is possible that the material will be declared as waste by the government, requiring treatment and disposal, which may result in as-yet-unquantified liabilities for the NDA.

NDA – Health Claims:

In previous reporting periods the Authority maintained a provision for the settlement of health claims payable to former employees in the civil nuclear industry. Claims have reduced to a non-material level in recent years and the future level of remaining claims is expected to be non-material and not able to be accurately forecast. The Authority has therefore discontinued accounting for the provision but recognises the resulting contingent liability.

Sellafield – Guarantees and other transactions:

At 31 March 2025, the Company had contingent liabilities incurred in the ordinary course of business arising out of guarantees and other transactions in respect of which, in the opinion of the Directors, no material losses are expected to arise. Any liabilities that did arise on such matters would ultimately be recovered from the NDA.

UKAEA – Eurofusion audit 2014-2022:

UKAEA has been audited on behalf of Eurofusion for the years 2014-2022 inclusive. The audit concluded in February 2025. The results of the audit are unknown but there is a potential obligation for funding to be repaid.

LCCC – RSA with NZNSSL:

As of the reporting date, LCCC has entered into a Revenue Support Agreement (RSA) with Net Zero North Sea Storage Limited (T&SCo) to support the Carbon Capture, Usage and Storage (CCUS) project under the Energy Act 2023. The RSA provides financial support in the event of revenue shortfalls during the Event of First User Delay and the Operational Period.

No liability is currently recognised, as the Commercial Operations Date (COD) for T&SCo is scheduled for 19 February 2029, and no triggering event has occurred. However, in the event of a delay beyond the Scheduled COD, the departmental group may be required to make payments under the RSA, including First User Delay Payments, Interim Difference Payments, and Reconciliation Payments.

At this stage, the amount of any potential payment cannot be reliably estimated. Therefore, in accordance with IAS 37, a contingent liability is disclosed.

Nature of obligation: potential payments under the RSA in the event of operational delays or revenue shortfalls
Triggering event: delay in plants using transport network achieving COD or revenue underperformance
Estimated financial impact: not currently measurable
Timing: subject to future events; reviewed annually until COD is achieved
Funding: payments are expected to be reimbursed by the department under the RSA Memoranda of Understanding (MOU)

Both LCCC and NZNSSL are entities consolidated into DESNZ departmental group, and any payments made under RSA will be eliminated on consolidation. The resulting financial impact on the DESNZ departmental group position will be the unavoidable operational and finance cost of NZNSSL operations during the period when CCUS T&S network user projects are delayed commissioning and connecting their capture facilities to the network.

Departmental group – quantifiable contingent liabilities

The departmental group has the following quantifiable contingent liabilities of more than £1m in either this financial year or prior financial year. Other liabilities are disclosed in our arm’s length bodies’ accounts.

NDA – AGR Transfer (£22,614m):

On 23 June 2021 the NDA, government and EDF Energy entered into new decommissioning arrangements for 7 Advanced Gas-cooled Reactor (AGR) stations in which government has directed NDA to take on the future ownership of the stations for decommissioning. The work will be undertaken by the NDA subsidiary Magnox Limited. The NDA will recognise the estimated future liability in its financial statements for each of the stations at the respective points at which N D A takes ownership. The completion and timing of the transfer of ownership is currently uncertain and contingent on the fulfilment of a number of conditions by the parties involved. The N D A therefore recognises a contingent liability for the future decommissioning costs of the stations. This has been estimated by the current owner of the stations at £22,614m (undiscounted) in its most recently published financial statements.

Sizewell C – IR35:

Sizewell C identified a potential underpayment of employment taxes in relation to certain subcontractors. Subject to further review of documentation and engagement with H M R C they may be liable to repay some of these taxes and interest and/or penalties. The company is currently evaluating the possible liability and judge that it may be in the range of £8m – £15m, and they expect to recover a substantial portion from subcontractors.

24. Contingent assets

Core department – quantifiable contingent assets

Deed relating to the British Coal Staff Superannuation Scheme (BCSSS) under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994 (£1.9bn):

Within 12 months of 31 March 2033, the trustee of the BCSSS shall pay to ‘the Guarantor’ (the Secretary of State) any surplus remaining on the scheme net of any amount retained for the obligation. The value of the surplus will depend on the value of scheme assets in relation to outstanding obligations. Based on the Government Actuary’s Department’s estimate of a £1.9bn surplus as at 31 March 2025, the core department considers a receipt from the scheme to be possible.

Departmental group – unquantifiable contingent assets

Mining Remediation Authority (formerly Coal Authority) – restructuring schemes:

By virtue of the seventh and ninth Coal Authority Restructuring Schemes (CARS 7 and 9) the Coal Authority is the beneficiary of restrictive covenants and clawback provisions relating to land and properties sold by the British Coal Corporation. In the event that the purchasers are able to retrospectively secure added value by obtaining planning consent for alternative uses the Authority will receive a share of the added value. Quantification of this asset is not possible.

The core department is the parent of the bodies listed in note 26 ‘List of bodies within the departmental group’ – these bodies are regarded as related parties and various material transactions have taken place during the reporting period between members of the departmental group. The related parties of the consolidating bodies are disclosed in their respective accounts. The core department is also the sponsor of NNL Holdings Limited.

The core department has engaged in material transactions with other consolidated bodies, other government bodies, and devolved administrations (the Northern Ireland Executive, Scottish Government and Welsh Government). The most significant of these transactions have been with the Exchequer Consolidated Fund and Contingencies Fund, Nuclear Decommissioning Authority, Office of Gas and Electricity Market, Bank of England and United Kingdom Atomic Energy Authority.

Ministers, board members, key managers of the departmental group or other related parties who have undertaken any material transactions with the core department during the year are listed below. Details of the department’s ministers and senior managers are shown in the remuneration report.

As a matter of course, senior departmental managers are on the boards of ALBs.

As declared in the ministerial register of interests, the brother of the Secretary of State (Ed Miliband) is a Non-Executive Director of Verian Group UK Ltd. The department incurred £1.7m worth of transactions with Verian, mainly in the form of R&D and professional services, in this financial year. Contracts were awarded under both the previous government and this government. The Secretary of State was not involved in the decision to award any of these contracts and will continue to recuse himself from any future decisions pertaining to Verian Group UK Ltd.

The Second Permanent Secretary of the core department, Clive Maxwell, is a director of Sizewell C Holding Company. The core department’s shareholding in Sizewell C Holding Company increased by £2,025m in the year.

The Chief Financial Officer of the core department, David Thomas, is a director of U K Shared Business Services Ltd which is an arm’s length body of Department for Science Innovation and Technology. The core department transacted £15m via Integrated Corporate Services (ICS) which provides a range of corporate and support functions.

26. List of bodies within the departmental group

The table below shows the list of DESNZ organisations included in the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2024 – known as the Designation Order, and amendments from the Government Resources and Accounts Act 2000 (Estimate and Accounts) (Amendment) Order 2024 – known as the Amendment Order.

Section (a) includes bodies consolidated within the departmental group accounts. Section (b) includes bodies within the departmental group but not consolidated – such as where net assets are not considered material to the departmental group accounts.

As a result of changes made in the 2024–25 Designation Order and Amendment Order some additional bodies are now included in the departmental group accounts boundary.

(a) Bodies consolidated in departmental group accounts for 2024–25

Designated body	Status	Notes
Bulb Energy Ltd	Other public body	Assets and liabilities are included in the core department’s figures
British Nuclear Fuels Limited	Other public body	-
Civil Nuclear Police Authority^{[note 1]}	NDPB	-
Mining Remediation Authority (formerly Coal Authority)^{[note 1]}	NDPB	-
Committee on Fuel Poverty	NDPB	Costs are included in the core department’s expenditure
Committee on Radioactive Waste Management	NDPB	Costs are included in the core department’s expenditure
Enrichment Holdings Ltd	Other public body	-
Enrichment Investments Limited	-	Consolidated by Enrichment Holdings Limited
Electricity Settlements Company Ltd	Other public body	-
Great British Energy Group Limited	Other public body	-
Great British Nuclear Limited (known as Great British Energy – Nuclear from June 2025)	Other public body	-
Low Carbon Contracts Company Ltd	Other public body	-
Nuclear Decommissioning Authority^{[note 1]}	NDPB	-
Nuclear Restoration Services Limited (formerly Magnox)	-	Consolidated by Nuclear Decommissioning Authority
Sellafield Limited	-	Consolidated by Nuclear Decommissioning Authority
Nuclear Waste Services Limited (formerly LLW Repository Limited)	-	Consolidated by Nuclear Decommissioning Authority
Dounreay Site Restoration Limited	-	Consolidated by Nuclear Restoration Services Limited
Radioactive Waste Management Limited	-	Consolidated by Nuclear Waste Services Limited
Net Zero North Sea Storage Limited^{[note 2]}	Other public body	-
North Sea Transition Authority (formerly Oil and Gas Authority)	Expert committee	Costs are included in the core department’s expenditure.
Salix Finance Ltd	NDPB	-
UK Green Infrastructure Platform Limited	Other public body	Dissolved on 15 August 2024
Sizewell C Limited	Other public body	-
Sizewell C (Holding) Limited	Other public body	-
United Kingdom Atomic Energy Authority^{[note 1]}
NDPB	(corporate)
AEA Insurance Limited	-	Consolidated by United Kingdom Atomic Energy Authority
UK Industrial Fusion Solutions Ltd	-	Consolidated by United Kingdom Atomic Energy Authority
UK Fusion Solutions Ltd	-	Consolidated by United Kingdom Atomic Energy Authority

(b) Bodies not consolidated in departmental group accounts for 2023-24

Designated body	Status	Notes
Climate Change Committee (formerly the Committee on Climate Change)^{[note 1]}	NDPB	Turnover and net assets are not material to departmental group accounts
National Energy System Operator Limited (NESO)	NDPB	-
NDA Archives Limited	Other public body	Subsidiary of NDA. Turnover and net assets are not material to departmental group accounts
Research Sites Restoration Limited	Other public body	Subsidiary of NDA. No costs or activities incurred in 2024-25 as the activities transferred to Magnox in 2016-17

Notes:

1. Entities fall in scope of the Trade Union (Facility Time Publication Requirements) Regulations 2017. Disclosure regarding Facility Time can be found in the relevant accounts

2. NZNSSL isn’t on the GRAA designation order, but H M Treasury issued a direction to consolidate it

27. Events after the reporting period

Non-adjusting events

Non-adjusting events are indicative of a condition that arose after the end of the reporting period and do not result in adjustment to the financial statements. They should be disclosed if of such importance that non-disclosure would affect the ability of the users to make proper evaluations and decisions.

Prax Lindsey:

On 29 June 2025, Prax Lindsey Oil Refinery (PLOR) formally filed for insolvency and on 30 June the Official Receiver (OR) was appointed as Liquidator of PLOR, Prax Storage Lindsey Limited and Prax Terminals Killingholme Limited. DESNZ has provided legal indemnity to the OR to protect them against financial loss or legal claims incurred in the course of carrying out their statutory functions. The government is also providing financial support for the OR’s essential operating costs. Total estimated costs are not yet fully known.

Award of carbon dioxide transport and storage licence: Liverpool Bay CCS Limited:

On 22 April 2025, The Secretary of State for Energy Security and Net Zero awarded the carbon dioxide transport and storage licence to Liverpool Bay CCS Limited (the Company), pursuant to section 7(1) (as modified by section 16 and schedule 1) of the Energy Act 2023. The Licence provides the framework for the Company to receive an ‘Allowed Revenue’ that the Company will be able to recover through use of system charges paid by Users of the Transport and Storage Network. The Licence award is paired with additional government support provided in the form of a Government Support Package and Revenue Support Agreement. The agreed model has been subject to a decision by ONS to provisionally classify Liverpool Bay CCS Limited to the central government sub-sector. As a result of this, the costs incurred (and capitalised) by the Company will be consolidated onto the DESNZ group balance sheet from the date of Licence award, even though the department and the public sector has no ownership or direct control over the company. The estimated cost of supply chain contracts for their Liverpool Bay Carbon Capture and Storage Project is £2bn.

LCCC HAR1 contracts signed:

In January 2024, LCCC was confirmed as the future counterparty for the 11 Green Hydrogen contracts awarded in Hydrogen Allocation Round 1 (HAR1). As of 31 March 2025, 5 out of the 11 contracts awarded under H A R1 had been formally signed by LCCC and counterparties. After the balance sheet date, a further 5 contracts were signed during the post balance sheet period, valued at £932m.

HPC strike price adjustment:

In June 2025, the government confirmed a £14.2bn investment to support the construction of the new Sizewell C nuclear power station, significantly increasing the likelihood of the project going ahead. The Final Investment Decision (FID) was subsequently taken on 22 July 2025. As outlined in Note 10.1, the commencement of Sizewell C has a direct impact on the strike price for the Hinkley Point C (HPC) Contract for Difference (CfD). During the current financial year, 85% of the total HPC strike price adjustment has been recognised. Sensitivity analysis indicates that moving to full (100%) recognition would have a positive impact on the valuation, reducing the related liability by £547m.

Hornsea 4:

On 7 May 2025, Ørsted publicly indicated that it intends to discontinue the Hornsea 4 project in the U K in its current form under the C f D awarded in A R6. The year-end value of Hornsea 4 was £3.89bn and the F V movement as at 31 March 2025 is an asset of £36m. If a termination occurs, it will be recognised in financial year 2025-26.

27.1 Date Accounts authorised for issue

DESNZ’s accounting officer has authorised these accounts to be issued on the same day as they were certified.

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Accountability report

	Note	General fund £m	Revaluation reserve £m	Taxpayers’ equity £m	Total reserves £m
Balance at 1 April 2023	-	(4,820)	447	(4,373)	(4,373)
Net parliamentary funding – drawn down	-	12,831	-	12,831	12,831
Net parliamentary funding – deemed	-	970	-	970	970
Supply (payable)/receivable adjustment	17	(1,025)	-	(1,025)	(1,025)
Income payable to the Consolidated Fund	-	(142)	-	(142)	(142)
Net expenditure for the year	-	(7,781)	-	(7,781)	(7,781)
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	1	1
Movement in reserves
Other Comprehensive Net Expenditure/Income for the year	-	343	(358)	(15)	(15)
Other movements	-	38	-	38	38
Balance at 31 March 2024	-	415	89	504	504
Balance at 1 April 2024	-	415	89	504	504
Net parliamentary funding – drawn down	-	8,840	-	8,840	8,840
Net parliamentary funding – deemed	-	1,025	-	1,025	1,025
Supply (payable)/receivable adjustment	17	(667)	-	(667)	(667)
Income payable to the Consolidated Fund	-	-	-	-	-
Net expenditure for the year	-	(8,905)	-	(8,905)	(8,905)
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	1	1
Movement in reserves
Other Comprehensive Net Expenditure/Income for the year	-	-	67	67	67
Transfers between reserves	-	1	-	1	1
Other movements	-	8	-	8	8
Balance at 31 March 2025	-	719	157	876	876

	Note	General fund £m	Revaluation reserve £m	Taxpayers’ equity £m	Non controlling interest £m	Total reserves £m
Balance at 1 April 2023	-	(216,173)	876	(215,297)	540	(214,757)
Net parliamentary funding – drawn down	-	12,831	-	12,831	-	12,831
Net parliamentary funding – deemed	-	970	-	970	-	970
Supply (payable)/receivable adjustment	17	(1,025)	-	(1,025)	-	(1,025)
Income payable to the Consolidated Fund	-	(658)	-	(658)	-	(658)
Net expenditure for the year	-	8,134	-	8,134	-	8,134
Amounts paid from distributable reserves	-	-	-	-	-	-
Non-cash adjustments
Auditors’ remuneration	4.1	1	-	1	-	1
Movements in reserves
Other comprehensive net (expenditure)/ income for the year	-	343	(265)	78	-	78
Transfers between reserves	-	(3)	-	(3)	3	-
Non-controlling interest	-	-	-	-	-	-
Other movements	-	23	1	24	3	27
Balance at 31 March 2024	-	(195,557)	612	(194,945)	546	(194,399)
Balance at 1 April 2024	-	(195,557)	612	(194,945)	546	(194,399)
Net parliamentary funding – drawn down	-	8,840	-	8,840	-	8,840
Net parliamentary funding – deemed	-	1,025	-	1,025	-	1,025
Grants from DESNZ (sponsoring department)	-	-	-	-	-	-
Supply (payable)/receivable adjustment	17	(667)	-	(667)	-	(667)
Income payable to the Consolidated Fund	-	(549)	-	(549)	-	(549)
Net expenditure for the year	-	(15,666)	-	(15,666)	85	(15,581)
Auditors’ remuneration	4.1	1	-	1	-	1
Other comprehensive net (expenditure)/income for the year	-	-	102	102	-	102
Transfers between reserves	-	8	(2)	6	(2)	4
Non-controlling interest	-	-	-	-	16	16
Other movements	-	133	-	133	-	133
Balance at 31 March 2025	-	(202,435)	712	(201,723)	644	(201,079)

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Consolidated Statement of Comprehensive Net Expenditure

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Statement of Changes in Taxpayers’ Equity (core department)

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Notes to the accounts

1. Accounting policies, judgements, and estimates

1.1 Basis of accounting

1.2 Accounting convention

1.3 Presentational currency

1.4 Basis of consolidation

1.5 Changes in accounting policies

1.6 Applicable accounting standards issued but not yet adopted

IFRS 17 Insurance Contracts

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 19 Subsidiaries without Public Accountability: Disclosures

Non-investment asset valuations

1.7 Operating income

Operating income from contracts with customers

Levies

Grant income

Income from the Mineworkers’ Pension Scheme

1.8 Staff costs

1.9 Grants payable

1.10 Taxation

1.11 Property, plant, and equipment (PPE)

Valuation of PPE

Revaluation of PPE

Depreciation of PPE

1.12 Investment property

1.13 Intangible non-current assets

1.14 Impairment of PPE and intangible non-current assets

1.15 Cash and cash equivalents

1.16 Leases

Assumptions:

Measurement of right-of-use assets:

Measurement of lease liabilities:

1.17 Subsidiaries, associates, and joint ventures

1.18 Financial instruments

Financial assets:

Financial liabilities:

1.19 Pensions

Funded defined-benefit pension schemes:

Unfunded defined benefit pension schemes:

Defined contribution pension schemes:

1.20 Provisions

Nuclear decommissioning provisions:

1.21 Contingent assets and liabilities

Contingent liabilities:

Contingent assets:

1.22 Judgements, estimates and assumptions

Key accounting judgements and estimates applied in these statements are described below:

2. Reporting by operating segment

3. Staff costs

4. Operating expenditure

4.1 Purchase of goods and services

Core department:

4.2 Depreciation and impairment charges

4.3 Provisions and other liability expenses

4.4 Grants expenditure

Core department:

5. Finance expense

6. Income

6.1 Operating income

Core department:

Departmental group:

6.2 Finance income

Core department:

Departmental Group:

7. Property, plant and equipment

Departmental group 2024–25

Departmental group 2023–24

Departmental group:

8. Right-of-use assets

Departmental group 2024-25

Departmental group 2023-24

9. Intangible assets departmental group

Departmental group 2024-25

Departmental group 2023-24