to aid generator by ending nuclear contracts
Financial Times, September 04, 2002
By Andrew Taylor, Utilities Correspondent
The government should axe controversial nuclear fuel reprocessing contracts
to ease financial pressures on British Energy, an environmental campaign
group affiliated to the Labour party said yesterday.
Sera, which claims support from more than 100 Labour MPs including
six cabinet ministers, wants Patricia Hewitt, the trade and industry
secretary, to end a £300m a year fuel reprocessing contract between
British Energy, the country's biggest nuclear generator, and the state-owned
British Nuclear Fuels.
"Patricia Hewitt could take one simple step to put British Energy
out of its financial misery - end its reprocessing contracts with BNFL,"
said Bill Eyres, Sera's chairman.
British Energy, which generates more than 20 per cent of the country's
electricity, saw its share price halve last month after it revealed
technical problems in cooling systems at two power stations. Concern
has been expressed that the company could struggle to refinance more
than ý200m of debt due to be repaid next year.
Low UK power prices would make it impossible to finance the construction
of new atomic reactors to replace ageing nuclear power stations, all
but one of which are due to close by 2023.
Switching to storing spent fuel, rather than reprocessing, would save
British Energy ý200m-ý250m a year, said Sera. The campaign
group supports early closure of nuclear reactors, which it says should
be offset by renewable generation and lower demand through increased
Sera said: "It is now clear British Energy will need help or eventually
it will go bust. The government can, by ending BE's reprocessing obligation
with BNFL, provide a substantial reduction in running costs, and benefit
It said the "fear of another Railtrack is a real one", and
warned that although British Energy will not run out of cash in the
short term, "it is inevitable in the medium term unless this issue
Mr Eyres said: "The secretary of state, as sole shareholder of
BNFL, can do this at the stroke of a pen. This move can be justified
on environmental grounds. Part of the money saved could be used to meet
the clean-up costs of redundant reactors."
Robin Jeffrey, British Energy's chief executive, has sought concessions
from the government including re-negotiating the BNFL contract, which
was negotiated before the company was privatised in 1996, reducing unfair
local authority rates in line with other types of generators and exclusion
for nuclear power from the climate change levy.