UK's nuclear debate

1 February 2003

Energy minister Brian Wilson:
I know that there are some ... who would want all those nuclear stations to be shut down tomorrow. I strongly disagree with that view. For one thing, the sudden shutdown of a nuclear reactor is not a practical option.
... Continuing to run [the stations] generates surplus revenue, which can then be put towards paying for the liabilities that are already incurred.
... The government has agreed to contribute significantly to British Energy's historic nuclear liabilities. However, British Energy will in turn pay its own way in future. That is an important principle: liabilities that arise from future operations at its stations must be paid for by the company.
Conservative energy spokesman Crispin Blunt:
[The nominal nuclear capacity, at 22%, is on a par with the UK's excess capacity.] If the nuclear stations were shut down there would still be a margin, provided by a combination of power supply through the interconnector to France, demand management and the 10% margin available by lowering voltage at peak demand. Prices would also rise, but supply would continue. We could switch off all British Energy's contribution to the grid and, on current figures, it could still supply the market on the coldest day of the year.
... If the company had gone into administration, the government would have been left with the liabilities that they have already accepted explicitly... However, the administrator would be able to refloat the company on the basis of the cash-generating assets, which have a significant positive value ... We would have had a nuclear generator ... fully in the private sector, with an opportunity for a transparent and sustainable method of internalising the costs of its environmental pollution.
Russell Brown (Labour):
Can he tell the House which third party in the wide world would be interested in taking over the running of those sites?
Martin O'Neill (Labour), chairman of the Select Committee on Trade & Industry, which has reported on British Energy and UK energy:
While British Energy was technically sound ... it was at best commercially unlucky and at worst downright incompetent.
... If British Energy had had flexibility and had become a broad-based energy company instead of being almost entirely a generator, we might not have had this debate.
... The reason above all else why little concern was given to the possibility of financial failure is that it takes a particular sort of incompetence not only for a company to run a utility at a loss, but for it to fail to recognise that it is working in a rigged market ... [Until 2001, when NETA was introduced, British Energy could bid into the 'pool' system and would be paid for its supply at the price of the most expensive capacity called on.] If British Energy had been as commercially aware as it should have been, it would have acted immediately. Other generators did that and were able to deal with matters.
... When Robin Jeffrey returned from America ... his ambition was to generate even more nuclear energy. He wanted either replacement or additional build. Frankly, he took his eye off the ball.
Vincent Cable, Liberal Democrat spokesman on trade and industry:
Can we have an independent financial assessment? Is administration really more expensive than solvent restructuring? Is keeping production going cheaper than stopping it?
... There is ... a serious problem in that the government is favouring one company over others through the Bill ... It is important to have some sense of the damage being done to British Energy's competitors ... One small part of the market is combined heat and power, which has lost about 75% of capacity ... CHP is receiving no compensation or help ... The government will have to explain to the European Commission why British Energy is being helped while other operators are not.
Paddy Tipping (Labour):
As a reflection of how quickly the energy market is changing, let me take the minister back to the performance and innovation unit energy review published last February, less than 12 months ago, in which it said: "Because nuclear is a mature technology within a well established global industry, there is no current case for further government support." Things have changed fairly radically in the space of a few months and I predict that they will change radically again.
... As things stand, there is no future for nuclear energy. The private sector has never replaced nuclear with nuclear and will not do so until the distant future when we have resolved the issues about decommissioning, disposal and liabilities. There is a strong argument for building a renewables base while nuclear declines.



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