2 December – The British government has agreed to fund £2.1bn ($3.3bn) towards British Energy’s nuclear waste clean-up costs, providing a further lifeline to the troubled electricity generator. It has also sought to encourage rival power firms to enter into long-term agreements to take power from British Energy.
Patricia Hewitt, Trade and Industry secretary, told Parliament: “The Government has recognised that if this restructuring is to work, it must contribute significantly. The cost to the Government will average £50m to £200m per annum for the next ten years and fall thereafter.” The government justified the move saying that these costs and more would in any event fall on them were British Energy be allowed to collapse.
The Government will pay the contribution into a new nuclear liabilities fund that will cover all uncontracted liabilities, decommissioning liabilities for its nuclear power stations and liabilities relating to spent fuel. British Energy will also have to pay in pounds 20m a year, pounds 275m of money raised through new bonds, and 65pc of its free cash flow.
The move is part of a package of measures to assist the former state-owned power firm which includes extending the term of a £650m loan to the company until March 9, the date by which the full restructuring arrangements have to be completed. So far, the company has withdrawn about pounds 390m of that sum.
The company will be required to undergo a major restructuring and Chairman Robin Jeffrey has already stepped down. He is being replaced by Adrian Montague, 54, deputy chairman of Network Rail Bondholders are to be offered a debt for equity swap and British Energy’s shareholders are likely to end up owning between 5-10 per cent of the company.
Other conditions include the sale, by February 14, of its interest in Canadian power plant, Bruce Power, and the subsequent sale of the company’s stake in Amergen. British Energy has also come to a revised arrangement with BNFL under which the bill it pays for fuel and reprocessing will be halved to £150m a year, according to a spokesman.
Over the weekend, financial advisors involved in the arrangements have been calling rival power generators including Scottish Power, Innogy and Powergen, asking them to consider entering into long-term contracts to accept power from British Energy to ensure some stability for the company. Current low wholesale power prices mean that these contracts may be obtainable.