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Monday, 26 August, 2002, 08:53 GMT 09:53 UK
Reform lifeline for British Energy
Nuclear power plant, Dungeness
British Energy runs eight power plants in the UK
The UK government has hinted that it may change the wholesale electricity market to help the struggling nuclear power company British Energy.

Energy Minister Brian Wilson said on Monday that British Energy had been badly hit by last year's introduction of new wholesale energy trading arrangements (NETA).

These rules opened up competition between operators and drove down the price of wholesale electricity.

But unlike other British power utilities, British Energy has no retail business to offset the effect of the lower prices.

The Department of Trade and Industry said a white paper setting out the government's policy on energy would be published by early next year.

Energy slump

British Energy, which produces a fifth of the UK's electricity, has seen its share price plummet by over 80% in the last year as its financial troubles worsened.


Trying to define a level playing field is difficult

Brian Wilson, Energy Minister

It is thought to need about 450m to repay debts and cover losses.

Newspaper reports over the weekend suggested that the government would help pay off the debts or even renationalise the company.

But Mr Wilson said in a BBC radio interview that the government would look at "the impact of NETA on the viability of generators".

He said "trying to define a level playing field is very difficult" among energy providers, but that British Energy should be able to get a price for its product that allows the company to operate profitably.

Nuclear debate

A change to the wholesale electricity market could be less controversial than direct financial help and would also benefit other energy companies which don't have retail operations.

Liberal Democrat trade and industry spokesman Dr Vincent Cable said at the weekend it would be "wrong for the government to organise an expensive bail-out for the nuclear power industry".

He believes that nuclear power isn't competitive in the short and medium term.

But the energy minister Mr Wilson said on Monday that it could cost more to shut nuclear power stations than keep them open.

However, he said the UK "should invest massively in renewable energy" and pointed to countries like France which he said had a "nice mix" of energy sources.

British Energy operates eight power plants in the UK, and runs other nuclear power operations in the US.

But the company's share price hit an all-time low of 59p at the market close on Friday, after news that it had shut a second reactor at its Dungeness power station for maintenance.

See also:

25 Aug 02 | Business
15 Jul 02 | Business
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