£4.3 billion loss after "traumatic" year

3 June 2003

British Energy (BE) has reported a £4.29 billion ($7.12 billion) loss for the year to end March, which includes a £3.74 billion ($6.21 billion) write-down in the value of its UK power stations.

BE chairman Adrian Montague said: "The past year has been traumatic for BE and its stakeholders. The combination of high fixed costs for our nuclear stations and a steep decline in power prices without the counterbalance of owning a retail supply business, together with a high level of unscheduled outages and a bleak outlook for future power prices, has resulted in terrible damage to our company." Total exceptional items ­ which include write-downs of £3.587 billion ($5.954 billion) for nuclear assets and £151 million ($251 million) in the value of its Eggborough coal-fired plant ­ came to £4.162 billion ($6.909 billion). Other exceptional items include write-downs in its nuclear decommissioning fund, the AmerGen decommissioning fund and other costs associated with the restructuring.

Before exceptional items, the group made a pre-tax loss of £130 million ($216 million), compared with a £42 million ($70 million) profit the previous year. This year's operating loss comprises a loss of £274 million ($455 million) in the UK, and a profit of £144 million ($239 million) from the company's North American activities. This includes a £97 million ($161 million) contribution from Bruce Power for the 101/2-month period up to the date of its disposal in February.

Pre-tax profit for its 50% share of AmerGen increased by £6 million ($10 million) to £47 million ($78 million). Total output was 20.2TWh, an average load factor of 95%. The total capacity of AmerGen was increased following the upgrading in Clinton's capacity in spring 2002 to 1017MWe.

The secretary of state for trade and industry secretary, Patricia Hewitt, has agreed to extend the 30 June deadline for the sale of BE's share in AmerGen.

Chief executive officer Mike Alexander said the operating loss "was compounded by a reduction of 3.8TWh in UK nuclear output and a 10% reduction in achieved prices." Total UK nuclear output fell to 63.8TWh, compared with 67.6TWh in the previous year. The gas circulator problems at Torness were cited as the major setback, resulting in around 4TWh in lost output. Technical problems were also experienced at Dungeness B and Heysham 2. The 2000MWe Eggborough coal-fired plant generated 5.7TWh.

UK production costs (including Eggborough and corporate overheads), rose to £21.70/MWh (3.60¢/kWh), compared to £20.30/MWh (3.37¢/kWh) in the previous year. At the same time, BE's achieved price fell from £20.40/MWh (3.39¢/kWh) to £18.30/MWh (3.04¢/kWh). Alexander said he expects a further 7% fall in BE's achieved price.

Government backs BE The UK government's Electricity (Miscellaneous Provisions) Bill has become law. The new act allows the government to support the restructuring of BE, or ease processes in the event of the company going into administration.

The act, introduced as a bill to parliament in January, would allow the government to incur expenditure on BE or, on acquiring BE companies or their assets, amend the Electricity Act 1989 to remove the barrier to government acquiring shares in 'successor companies'. The act also amends the 1989 act to remove the ceiling on financial assistance in relation to nuclear liabilities, and change the tax status of such assistance.

Energy minister Brian Wilson commented: "There have been many misrepresentations of the government's support for BE. Our priority has been to maintain security of supply and ensure the safety of the company's plants. It is quite wrong to claim, as some have, that large amounts of taxpayers' money have been given to BE. Last September, we set up a credit facility for the company which was never fully utilised. Since the company sold its interests in Bruce Power, it has repaid the loan in full, although the facility will remain in place."

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