7 May, 2002 – Press reports today suggest that UK nuclear power generator British Energy is in discussions with British Nuclear Fuels (BNFL) with a view to taking over the running of a number of its ageing Magnox reactors – as a possible trade off for dropping an action over the recycling of spent fuel.

Talks began in the Spring about British Energy signing a management contract to operator four out the six Magnox power stations currently owned and operated by BNFL. According to reports, the plants are thought to be Oldbury, Wylfa, Dungeness and Sizewell.

Around the same time British Energy decided not to press its complaint with the Office of Fair Trading about fuel reprocessing contracts with BNFL. British Energy had argued the low cost and plentiful supply of fresh uranium made reprocessing uneconomic.

With both companies struggling to cope with depressed electricity prices, driven down by the competitive structure introduced by New Electricity Trading Arrangements, it has been suggested that British Energy has agreed to keep sending fuel to BNFL for reprocessing in return for getting an attractive fee for managing the Magnox reactors to the end of their working life up to 2010. Neither company has been willing to comment.

The deal could be announced on Wednesday to coincide with British Energy’s full-year results forecast to be around £ 32m compared to £ 57m for 2001. In April the company warned that its UK operations were losing money as a result of unsustainable electricity prices, although its US operations were performing well.

The terms of the possible deal would give British Energy protection against any loss made from the difference between the cost of electricity production and the market price.

The Magnox reactors are the oldest ones in the UK and were left with BNFL when the rest of the UK nuclear industry was privatized with the floating off of British Energy, which owns ten modern Advanced Gas-cooled Reactors as well as the Sizewell B Pressurized Water Reactor.