Bill to clean up nuclear sites rises by nearly �1bn

Mark Milner, industrial editorSaturday February 25, 2006The Guardian
The potential bill facing the government for cleaning up British Energy's nuclear liabilities has risen by almost £1bn to more than £5bn.
British Energy said yesterday that the latest of a series of five-yearly reviews of its uncontracted liabilities and decommissioning costs had shown they had increased by £956m to £5.3bn, mainly as a result higher decommissioning costs.
Under British Energy's restructuring plan completed last year, the government agreed to indemnify the company against any shortfall in the nuclear liabilities fund which meets the clean up costs. In return British Energy contributes 65% of its net cash flow to the fund. The increased liabilities will not mean the company will have to pay more to the fund.



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Yesterday British Energy said its operating profits for the nine months to January 1 totalled £377m, with £242m coming in the third quarter.
The company has eight nuclear power plants and one coal fired station and its profits have been boosted by the rising price of electricity. It has pre-sold all its planned output for the current financial year at an average price of £33.3 per megawatt hourand has sold 60% of next year's output at an average price of £37.8 per megawatt hour. The company's performance was, however, held back by unplanned shutdowns with British Energy acknowledging that unexpected loss of generating capacity would lead to higher costs.
So far this year British Energy has invested £170m in its plant and is planning to increase that to up to £300m for next year, a programme which it hopes will cut unexpectedshutdowns. It is also planning to increase spending on operating costs by around £60m, including more staff and higher spending on insurance and security. The company declined to be drawn on the increased security measures.
Elsewhere in the energy sector, National Grid confirmed that it is in talks with the US natural gas distribution company KeySpan Corp which industry sources suggested could lead to a $7bn (£4bn) bid. The UK company already has energy interests in the north east United States and KeySpan's operations in New York, Massachusetts and New Hampshire are seen as a good fit.
Analysts had suggested National Grid could launch a rights issue or place shares to help finance a deal but yesterday the company said any transaction would be on a cash basis, financed from borrowings. Consolidated Edison from the US is also seen as a possible bidder, though it could face competition problems.Special reportThe nuclear industryUseful linksBritish EnergyDepartment of Trade and IndustryBritish Nuclear Fuels LtdCampaign for Nuclear DisarmamentGreenpeaceHSE nuclear glossaryCome Clean WMD awareness programmeUK atomic energy authorityNational Radiological Protection BoardFriends of the EarthWorld Nuclear AssociationWorld Nuclear Transport Institute
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