British Energy
From Wikipedia, the free encyclopedia
| British Energy plc | |
|---|---|
 |
|
| Type | Public |
| Founded | 1995 |
| Headquarters | East Kilbride, Scotland, UK |
| Key people | Adrian Montague, (Chairman) William Coley, (CEO) |
| Industry | Energy |
| Products | electricity generation |
| Revenue | £2,999m (2007) |
| Operating income | £794m (2007) |
| Net income | £465m (2007) |
| Website | http://www.british-energy.com |
British Energy plc (LSE: BGY) is the UK's largest electricity generator by volume and a constituent company of the FTSE 100 Index. It is primarily an operator of formerly state-owned nuclear power stations.
Contents |
[edit] Operations
Eight nuclear power stations:
| Power Station | MWe | Construction started | Connected to grid | Commercial operation | Estimated closure date |
|---|---|---|---|---|---|
| Dungeness B | 1110 | 1965 | 1983 | 1985 | 2018 |
| Hartlepool | 1210 | 1968 | 1983 | 1989 | 2014 |
| Heysham 1 | 1150 | 1970 | 1983 | 1989 | 2014 |
| Heysham 2 | 1250 | 1980 | 1988 | 1989 | 2023 |
| Hinkley Point B | 1220 | 1967 | 1976 | 1976 | 2011 |
| Hunterston B | 1190 | 1967 | 1976 | 1976 | 2011 |
| Sizewell B | 1188 | 1988 | 1995 | 1995 | 2035 |
| Torness | 1250 | 1980 | 1988 | 1988 | 2023 |
One coal fired power station:
In 2007 British Energy entered into a 7 year partnership agreement with Doosan Babcock Energy to provide technical, engineering and operational support across all British Energy sites. The agreement is worth around £550 million secures up to 800 jobs in Scotland and the rest of the UK. [1]
[edit] History
British Energy was established, and registered in Scotland, in 1995 to operate the eight most modern nuclear power plants in the UK. It took the two AGR from Scottish Nuclear and five AGR and sole PWR from Nuclear Electric. The residual Magnox power stations from these two companies were transferred to the Magnox Electric which later became the generation division of British Nuclear Fuels. The company was privatised in 1996.
It has major English technical offices at Barnwood (formerly the HQ of Nuclear Electric).
In June 1999, in an attempt to become an integrated generating and retail company, British Energy bought the retail electrictity and gas supplier SWALEC based in Wales, providing 6% of the England and Wales electricity supply market. However it was unable to purchase another retailer at a reasonable cost to create a widespread retail presence, so sold SWALEC a few months later to Scottish and Southern Energy.[2]
British Energy bought the 2,000 MWe Eggborough coal fired station from National Power in 2000 to provide a more flexible power production facility to reduce penalty charge risks from the New Electricity Trading Arrangements introduced in March 2001. Despite this, the new arrangements led to a significantly lower electricity price for inflexible base load power stations such as British Energy had. The purchase of Eggborough occurred at the peak of the market for power stations, and in 2002 the value of the station was written down by half.[3]
In 2005 British Energy announced a 10-year life extension for Dungeness B, that will see the station continue operating until 2018.[4] British Energy hopes most of its other advanced gas-cooled reactors will obtain similar life extensions as their estimated closure dates are approached.
In June 2006, British Energy joined the Dignity at Work Partnership, an anti-bullying project. The Dignity at Work project is being led by trade union Amicus as it seeks to tackle the growing problem of bullying and harassment in the workplace. Peter Prozesky, Head of Operations at British Energy said: "We recognise the seriousness and the consequences bullying in the workplace could have on our staff and ultimately the company, and at British Energy Group we remain committed to fostering our value of respect."
[edit] Bruce Power
In 2001, the company was the major partner in taking on the operating lease to become the licensed operator of the Bruce Nuclear Generating Station in Ontario, Canada. The resultant subisidary was called Bruce Power. As part of the financial re-structuring, the sale to a consortium of Canadian investors was announced in December 2002 with the sale being completed in February 2003.
[edit] 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, as well as issues with a number of its reactors (resulting in much capacity being offline during critical periods of the company financial crisis) and a failure to complete a timely sale of its joint-venture share in AmerGen. 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 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 oil and natural gas have led to increased speculation on British Energy's relisted shares.
[edit] 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 its financial problems and government help with its 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.[5]
The British Government's interest in British Energy is managed by the Department for Business, Enterprise and Regulatory Reform (BERR), falling under the remit of the Shareholder Executive, which is part of BERR.
The restructuring of British Energy has been subject to three National Audit Office reports; in May 1998, February 2004 and March 2006.
In 2007 the House of Commons Public Accounts Committee reported on the restructuring.[6] They noted that the taxpayer has been left to underwrite large liabilities, revalued at £5.3 billion, while creditors who would have received little on liquidation received bonds and shares worth £3.9 billion in 2006. They also noted that British Energy may now lack an incentive to reduce the eventual liabilities falling to the Nuclear Liabilities Fund.
[edit] Disposal of government interest
In July 2006 the government announced that they were considering selling part of their interest in British Energy.[7] On 30 May 2007 it was announced that the Secretary of State for Trade and Industry would instruct the Nuclear Liabilities Fund to sell up to approximately 450 million shares, representing around 28% of the Fund's interest in British Energy.[7][8] The Fund's cash sweep percentage would be reduced from around 64% to approximately 36% following the sale.[8] Revenue from the sale will be used to diversify the Nuclear Liabilities Fund's assets.[7] It is expected that RWE, EDF, Centrica and Vattenfall will bid for British Energy shares.[9]
[edit] See also
[edit] References
- ^ http://www.allmediascotland.com/allnewswire/1512/British_Energy_Signs_%A3550m_Partnership_with_Doosan_Babcock
- ^ http://www.nao.org.uk/publications/nao_reports/03-04/0304264.pdf#page=28
- ^ http://www.nao.org.uk/publications/nao_reports/03-04/0304264.pdf#page=24
- ^ British Energy - News
- ^ http://business.timesonline.co.uk/article/0,,9078-2235388,00.html
- ^ The Restructuring of British Energy, 19 July 2007, House of Commons Public Accounts Committee
- ^ a b c Government disposal of interest in British Energy Group plc, Government News Network, published 2007-05-30, accessed 2007-06-06
- ^ a b Impact of Government Announcement re Disposal of Interest in British Energy, British Energy, published 2007-05-31, accessed 2007-06-06
- ^ "Swedish power giant may join race for British Energy", Power Engineering International, 2008-04-15. Retrieved on 2008-04-19.
[edit] External links
- British Energy Group Plc
- Estimated reactor closure dates, House of Lords Hansard column WA232, 24 February 2005
- Risk Management: The Nuclear Liabilities of British Energy plc, NAO report HC 264 2003-04
- The restructuring of British Energy, NAO report HC 943 2005-06
[edit] In the media
- October 23, 2006, Nuclear Engineering International, British Energy cracking up
- October 16, 2006, BBC: Cracks knock 24% off British Energy shares
- August 16, 2006, Bloomberg: British Energy Shares Sink as Output Goal Threatened
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