Soaring cost of bringing N-plants back on line

Aug 14 2008 by Iain Laing, The Journal

BRITISH Energy has admitted that the return to service of its Hartlepool and Heysham 1 reactors will cost much more than originally thought.

The company said the timetable for bringing the reactors back online was unchanged, but added costs are now estimated to be around £115m in the 2008/09 financial year, compared with previous hopes for £50m.

More than 1.2 million man hours have been spent on work at the two stations, which have been out of action since last autumn after wire corrosion issues were identified within boiler units.

The loss of power from the two stations meant British Energy’s nuclear output fell to 9.5 terawatt hours (TWh) in the three months to June 29, compared with 13 TWh a year earlier. Adjusted earnings of £129m were down from £253m in the comparable period, despite higher power prices.

British Energy added that discussions continued in connection with a potential offer for the company. It has rebuffed two takeover offers from EDF for being too low, while Centrica is also thought to be interested in a deal.

British Energy operates eight nuclear power stations and should play a major role in the proposed development of the next generation of nuclear power supply.

Chief executive Bill Coley said: "As we continue discussions in respect of a potential transaction, we remain clear that the expertise of our people, together with our sites, makes British Energy uniquely positioned to play a pivotal role in nuclear new build."

The company’s annual meeting in July was told there had been some slippage to the programme at Hartlepool and Heysham 1 and that the sites may not return until the third quarter, covering the period to the end of December. This is still the case, British Energy reported in first quarter results today.

It said the higher repair bill reflected the cost of inspecting the wire windings on all 32 boiler closure units at the two locations, plus higher costs of design, fabrication and installation of the modifications.

The issue cost the company £20m in the previous financial year, as well as forcing it to buy power elsewhere to meet its contractual obligations.