Nuclear generator British Energy (BE), which supplies close to a fifth of the UK’s electricity, has announced its preliminary results for the year to 31 March 2006.

The company delivered a significantly improved financial performance, largely on the back of higher wholesale prices, although this was partially offset by output below expectations and the contracted price position, which continues to feel the impact of a number of fixed and capped price contracts entered into at a time when much lower market prices prevailed.

Nonetheless, net profit for the year came in at £430 million ($782 million), more than ten times the £41 million ($75 million) seen in 2005 before the company’s restructuring.

The results reflect higher electricity prices with an operating margin increased to £9.2/MWh ($16.7/MWh) for the year on a total output of 68.4TWh, up from 67.4TWh in 2005, of which 60.4TWh came from nuclear generation and 8.0TWh from the coal-fired Eggborough.

The increased output came from a 27% reduction in unplanned outages to 12.9TWh, though this was mostly offset by larger statutory outages of 4.2TWh. Output was adversely affected by 6.0TWh due to inspection of the boiler closure units at Heysham 1 and Hartlepool, an outage to replace the generator stator at Hartlepool and restrictions relating to the Hartlepool generator transformer.

Realised price from generation was £32.0/MWh ($58/MWh), up £11.6/MWh ($21/MWh) on 2005, bringing in revenue of £2593 million ($4719 million), with operating and energy costs of £1747 million ($3179 million), or £22.8/MWh ($41.5/MWh).

Fuel costs amounted to £556 million ($1011 million), of which nuclear accounted for £349 million ($635 million), some £5.8/MWh. ($10.5/MWh).

BE invested £283 million ($515 million) on plant over the year, notably on replacement of above ground cast iron pipework, boiler safety work at Hartlepool and Heysham 1 and development of the replacement data processing system for Dungeness B. Investment on strategic spares was also significantly higher than in previous years with the acquisition of new transformers, rotors and stators and the continuation of the rolling spares refurbishment projects across the fleet.

Last September BE announced a decade-long extension to the life of Dungeness B to 2018 and the group intends to seek further life extensions of all its nuclear stations where technically and economically feasible. BE has already begun the technical work required to evaluate life extensions at Hinkley Point B and Hunterston B and is expected to make a decision by 31 March 2008. The most significant lifetime technical issues relate to AGR components which it may not be economic to repair or replace, including risks to boilers and graphite brick cracking.

Bill Coley, BE chief executive, commented: “Largely due to higher realised prices, the group has shown significant improvement in profitability and cash flow.” He added: “The wholesale market for electricity continues to be volatile, which is likely to continue due to uncertainty over gas supply, environmental legislation and increasing concerns over shortages in power capacity. We expect electricity prices to continue to be driven largely by gas prices.”

Looking forward, nuclear output for the financial year 2006-07 is expected to be around 63TWh with a total investment in plant and other projects to be in the range £250-£300 million ($455-$546 million).

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