British Energy
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British Energy is the UK's largest electricity which generator manages eight nuclear power stations; Dungeness, Hartlepool, Heysham stage 1 & 2, Hinkley Point B, Hunterston B, Sizewell B and Torness. It also ownes Eggborough coal fired power station.
History
British Energy was established in 1995 to operate the eight most modern nuclear power plants in the UK. The company was privatised in 1996.Financial difficulties
The company has been in financial trouble since 2002, when it first approached the British government for financial aid. This followed a slump in wholesale energy prices, a failure to obtain relaxations on the Climate Change Levy and renegotiations of its back-end fuel costs with BNFL. Parties to the resulting talks included bondholders, significant but unsecured creditors, power purchase agreement counterparties, and a group of secured creditors known as the Eggborough banks, because they provided financing for the purchase of the Eggborough coal-fired power plant from National Power in 2000.The plan that resulted from these talks would nearly eliminate any equity interest by existing stockholders, as the firm's creditors waived over £1bn of debts in return for control of the company. Shareholders would receive only 2.5% of the shares of the new company. However, a hedge fund, Polygon Investment Partners LLP announced in July 2004 that it has an alternative plan, and it has since sought to block the government’s negotiations. It believes that the proposed restructuring violates the rights of shareholders under the law of the European Union and under the UK Human Rights Act 1998.
On September 22 2004 the UK government's investment of over £3 billion in the restructured firm was approved by the European Commission. On September 24 the company was reclassified as a public body in what the Office for National Statistics described as a reflection of "the control that can be exercised by government over British Energy." This move was described by The Times as a de-facto nationalisation of the group.
Recent positive announcements from all quarters including many renowned environmentalists coupled with an increase in the wholesale energy prices of notably oil and natural gas has lead to increased speculation on British Energy's relisted shares.
Restructuring
Under the British Government's restructuring programme the Nuclear Liabilities Fund (NLF) acts as a creditor and liability receiver for British Energy Group. In return, a mechanism was put in place whereby NLF can carry out a cash sweep of the organisation whereby it claims 65% of British Energy's available cash flow each year; on top of a fixed annual contribution. British Energy is allowed to borrow up to £700m under the arrangements, with the NLF providing £275m.The British Government is also assuming liabilities worth between £150m and £200m p.a. over the next ten years, which will help reduce British Energy's nuclear fuel liabilities. The present fuel liabilities run until 2086.
Despite it's financial problems and government help with it's fuel liabilities British Energy's Chief Executive claimed, on 20 June, 2006, that nuclear power stations would be economically viable without government guarantee or subsidy if the operation of the energy market was changed [link].
The British Government's interest in British Energy is managed by the Department of Trade and Industry however it also falls under the remit of the Shareholder Executive.
The restructuring of British Energy has been subject to three National Audit Office reports; in May 1998, February 2004 and March 2006.
See also
External links
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