British Energy makes profit, benefits from price increase

LONDON: Power company British Energy Group Plc. reported operating profit of 135 million pounds for the first half ended 2 October. It did not provide any comparative year-earlier figure, but it had reported a loss of 262 million pounds for the first half of 2004.

The company, whose nuclear reactors can produce a fifth of the country’s electricity, benefited from the increased wholesale prices of power, which have more than doubled over the past 12 months. However, unplanned production halts in its Hartlepool and Heysham units have affected the company’s projections for the year — lowered output by 15 per cent annually, compared with about 3 per cent downtime for the world’s most efficient nuclear generators.

Chief executive Bill Coley said the impact will be minimised as a result of continuing improvements in operating metrics as a result of a performance improvement programme.

The company’s total production rose to 33.1 terawatt hours in the first half, up from 31.7 terrawatt hours over the same period last year. It expects to produce 61 terrawatt hours during the fiscal ending March 2006 against a projected 63 terrawatt hours. This will be an improvement on the 59 terrawatt hours it produced in 2004-2005.

The company, on the brink of a collapse due to its debt three years ago, said it had sold half of its output for 2006-2007 at 35 pounds per megawatt hour. It had achieved a price of 25 pounds per megawatt hour during the first half of the current fiscal, up from 24 pounds per megawatt hour in the first quarter. It has also sold 95 per cent of its planned output for the current financial year at an average of 32.5 pounds per megawatt hour.

It is estimated that a price of 20 pounds per megawatt hour is required for the company to break even.

Coley said the company will spend more than 250 million pounds as capital expenditure on its nuclear reactors this year, while a further 250 million pounds will be spent in the following year.

The company has a mandate to extend the asset life of its Dungeness power station in Kent by 10 years. A decision on whether its Hinkley Point B and Hunterston reactors will have their lives extended will be taken in 2008, three years before their planned closure. Its three reactors — at Hartlepool 1, Dungeness and Heysham 2 — are out of action, but at least two of them will be recommissioned before March 2006.

Coley said he believes the company can help bridge the gap between old and new plants by extending the life of some, if not all, of its eight facilities.

The company’s share price has doubled since relisting in January, closing Tuesday at 505.25 pence a share.