[Date Prev][Date Next]
[cdn-nucl-l] UK Nuclear power initiative planned
Posted on UK Yahoo News on September 5, 2002 and at:
Nuclear power initiative planned
By Andrew Callus
LONDON (Reuters) -The government is expected to clarify the future of
crisis-hit nuclear power producer British Energy, industry sources say.
The sources told Reuters the government initiative could help ensure the
survival of the country's only listed nuclear power producer,
financially stretched British Energy, but would fall short of the
privatised group's best hopes.
British Energy, which provides more than a quarter of the nation's
energy needs, faces losses stretching into the future because of
persistently weak wholesale electricity prices.
It is in talks with the government to try to get help without falling
foul of European Union rules on state aid.
Topics for discussion include exemptions for part of its output from the
climate change levy, which aims to favour renewable energy at the
expense of polluting generators. A possible improvement in contract
terms with state-owned fuel reprocessor BNFL is also on the table.
British Energy declined to comment. BNFL said it was not aware of any
announcement, and that talks with British Energy were "ongoing". A
spokeswoman for Department of Trade and Industry also declined to
"It will cover all the issues but it may not make the company totally
happy," said one source on Thursday.
British Energy's status as a shareholder-owned business since the
mid-1990s is unusual in Europe, where governments are very sensitive to
the concerns of anti-nuclear environmental groups, and to safety issues.
As its problems pile up, with a plant closure last month that sent its
share price into a fresh downward spiral -- commentators have drawn
uncomfortable parallels with Railtrack (LSE: RTK.L - news) , the failing
privatised railway network operator the government forced into
administration last year.
Investors are hoping that ministers will do what they can to avoid a
Analyst Iain Turner of Deutsche Bank (Xetra: 514000.DE - news) estimates
that full exemption for British Energy's from the climate change levy is
worth about 300 million pounds.
But because of the complexities of British Energy's sales contracts and
of the levy itself, he says British Energy is likely to get only 70
million pounds net benefit -- worth about 40 pence a share on top of
British Energy's current 82-1/2 pence share price.
Meanwhile British Energy has told MPs that a move to storing fuel rods
instead of the 300 million pound BNFL contract to recycle them could
reduce its costs by 200 million pounds. This could potentially add two
pounds a share, Turner says, though he warned that BNFL is likely to
require some compensation here.
Other moneysaving ideas have also been raised by the companies involved
and by analysts. These include the possibility of a contract to run
BNFL's Magnox stations, a full scale merger with BNFL, renationalisation
of British Energy, and a reduction in British Energy's local taxation
bill, have also been raised.
British Energy made 42 million pounds pretax profit before exceptional
items last year but this was wiped out by 500 million pounds worth of
exceptional writeoffs linked to a 30 percent slide in the price of the
power it produces.
It is due to provide a trading statement for investors at the end of
The company suffers more from weak wholesale prices than other power
companies because it has no retail customer base to offset the effect on
its profits, and no ability to switch off its nuclear plant when prices