The winding-down of Heysham's two power stations will have a "significant impact" on Lancaster City Council's finances, a report has revealed.
The report, published ahead of Lancaster City Council's budget meeting on Wednesday, said that the planned decommissioning of Heysham 1 and 2 will cut the council's income from business rates considerably.
It said the rateable value of the power stations counts for more than 45 per cent of the council's total rateable value.
Most non-domestic properties, like shops, offices, pubs, warehouses, factories and guest houses, have to pay business rates.
"The ongoing impact of the pandemic and the restrictions placed on business means that business rates continue to be an area of significant uncertainty," said the report.
"Business rates retention volatility remains a risk to the council in particular the recent announcements in regard to the decommissioning of the Heysham nuclear reactors."
The report also said the council may have to rely on the government's 'safety-net system' if its business rate income falls, as expected, by more than 7.5 per cent.
It also said the council would need to rely on its business rates reserves to "smooth operational shortfalls in the short term".
Heysham 1 is due to move into de-fuelling and decommissioning in 2024, and Heysham 2 in 2028.
A spokesman for Heysham Power Stations said: "Heysham power stations have maintained a regular open dialogue with the city council on the end of generation dates for both Heysham 1 and Heysham 2, and in the past the stations have seen their operating lives extended.
"Heysham 1 has been operating since 1983 and has been contributing to the economy with wages and supporting local businesses since the early 1970s and this will continue when the site moves into defueling and decommissioning. Heysham 1 is planning to generate electricity until March 2024. Heysham 2 was originally due to stop operating in 2023, and now has an estimated end of generation date of 2028."
The estimated Lancaster City Council business rate deficit for 2021/22 is £12.517m. The city council has a 40 per cent share of this, at £5.007m. Most of this will be offset by a government grant.
The report said: "As a result of the pandemic Central Government has again amended and extended the reliefs that could be given to ratepayers. Councils are being compensated for this through payments of Section 31 grant so that this element of the deficit will not impact on local authority budgets."
The 2022/23 Lancaster City Council budget meeting will be held this coming Wednesday (February 23) at Morecambe Town Hall. It starts at 6pm and is open to the public.
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