Nuclear generator British Energy has admitted that it is likely to fall short of its generation targets this year after large unplanned losses struck at its performance.

In reporting its results for the first quarter, ending July, of its 2006-07 financial year it says: “Whilst very challenging, we continue to work towards achieving 63TWh for the financial year 2006/07. However we now expect output to be in the range 61TWh to 63TWh assuming no large losses occur.”

Strong electricity prices enabled the company to deliver a reasonable financial performance for the first quarter, with a net profit of £75 million ($138 million) on the quarter ahead of the 64.62% Nuclear Liabilities Fund cash sweep, well up on 2005’s £16 million despite a nuclear output well below expectations. Prices are reflected in an increased operating margin of £13.8/MWh ($25.5/MWh), compared with £4.0/MWh ($7.4/MWh) in the previous corresponding period.

Total fuel costs amounted to £114 million ($205 million), compared to £137 million ($253 million) previously, with nuclear fuel costs of £80 million ($148 million), or £5.2/MWh ($9.6/MWh). However, the company also noted that uranium prices have increased significantly, which would by 2015 lead to additional annual fuel costs of some £80 million ($148 million) if current trends continue.

Total output was down from 17.4TWh to 17.0TWh, of which nuclear provided 15.3TWh and coal 1.7TWh. Losses from unplanned and non-routine events were 3.4TWh, including 0.6TWh of outage and refuelling overruns and 0.2TWh of planned boiler closure unit inspections, up nearly half as much again on 2005’s 2.3TWh. This was due to human performance issues primarily related to one plant and equipment issues including boiler tube leaks at Hunterston B and reactivity constraints affecting a number of plants, the company said.

A recent boiler inspection at Hunterston B revealed more widespread tube cracking than had been expected which will put back operations far at least another month and the unit may operate at lower power until the further repair work can be completed. Additional boiler tube inspections are planned at both the other Hunterston B unit and the two units at Hinkley Point B with worrying implications for generation performance. Analysts are betting British Energy hits closer to the 61TWh mark of the proposed range and misses performance targets for the second year running.

Bill Coley, chief executive commented: “I am pleased with our financial results benefiting from strong electricity prices. However, I am not pleased with the level of unplanned losses.”