December 2002
Nuclear Fuels scoops £1bn windfall from BE's collapse
The Observer, December 1, 2002
By Oliver Morgan, industrial editorOriginal address: http://www.observer.co.uk/business/story/0,6903,851169,00.html
[Posted 02/12/2002]
Sellafield-based British Nuclear Fuels has gained a £1 billion windfall from the restructuring of collapsed British Energy, which will underpin its future and enhance prospects of a public-private partnership.
BNFL has negotiated extensions of fuel supply contracts to BE's eight nuclear stations. The contracts were due to end in 2006 but now they will run to the end of each reactor's life - the last retires in 2020. Details come three days after a deal to supply Electricité de France with up to a fifth of its fuel.
BNFL has so far been seen as a loser in the BE debacle. As part of attempts to keep the generator out of administration, it agreed to reduce the annual payments it gets for reprocessing BE's spent fuel by as much as half. But as one company source said: 'We share the short term pain, but in terms of the long term future of the business this takes away a major uncertainty. This is a significant boost to our finances, in the order of £1bn.'
Combined with the eventual removal of £40bn liabilities, this means BNFL has fuel and decommissioning businesses that are 'eminently PPP-able'.
Meanwhile a split emerged between Energy Minister Brian Wilson and regulator Ofgem over the electricity trading system that pushed down power prices, provoking the BE crisis.
The consumer watchdog Energy Watch will this week accuse utilities of 'exploiting' consumers. Wholesale energy prices have dropped 36.5 per cent since 1999, but prices to householders have risen by 1.8 per cent.
Wilson says this position must change, but has been keenly resisted by Ofgem's chief, Callum McCarthy.
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