British Energy
Encyclopedia
British Energy was the UK's largest electricity generation
company by volume, before being taken over by Électricité de France
(EDF) in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal fired power station.
From 1 July 2010 the rebranding of British Energy locations and communications to EDF Energy commenced as part of its incorporation into the parent group, following around 17 months of dual branding. This was concluded with the renaming of the operating company from British Energy Generation Limited to EDF Energy Nuclear Generation Limited on 1 July 2011.
plants from Scottish Nuclear
and five AGR
and a sole PWR plant from Nuclear Electric
. The residual Magnox
power stations from these two companies were transferred to Magnox Electric which later became the generation division of British Nuclear Fuels. The company was privatised in 1996.
It retained 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 electricity 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.
British Energy bought the 2,000 MWe
Eggborough coal fired station
from National Power
in 2000 to provide a more flexible power production facility and 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.
In 2001, the company was the major partner in taking on an operating lease to become the operator of Bruce Nuclear Generating Station
in Ontario
, Canada
. The resultant subisidary was called Bruce Power
. As part of financial re-structuring, Bruce Power was sold to a consortium of Canadian investors in February 2003.
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 was at the time held to be potentially worth around £550 million, bringing up to 800 jobs into Scotland
and the rest of the UK.
, 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; who had provided financing for the purchase of the Eggborough coal-fired power plant in 2000.
The plan that resulted from these talks nearly eliminated any equity interest of existing stockholders; the firm's creditors waived over £1bn of debts in return for control of the company. Shareholders received only 2.5% of the shares of the new company.
On 22 September 2004 the UK government's investment of over £3 billion in the restructured firm was approved by the European Commission
. On 24 September 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.
(NLF) acted as a creditor and liability receiver for British Energy Group. In return, a mechanism was put in place whereby NLF could carry out a cash sweep of the organisation and claim 65% of British Energy's available cash flow
each year, on top of a fixed annual contribution. British Energy was allowed to borrow up to £700m under the arrangements, with the NLF providing £275m.
The British Government also assumed British Energy nuclear fuel liabilities worth between £150m and £200m p.a. over ten years. These fuel liabilities extended 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.
The British Government's interest in British Energy at this time was managed by the Shareholder Executive
on behalf of the Department of Trade and Industry (DTI).
The restructuring of British Energy was 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. They noted that the taxpayer had 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.
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. The Fund's cash sweep percentage would be reduced from around 64% to approximately 36% following the sale. Revenue from the sale was used to diversify the Nuclear Liabilities Fund's assets.
Centrica
purchased a 20% share of British Energy from EDF in August 2009.
On 1 April 2010, EDF transferred the coal-fired Eggborough Power Station
to the plant's bondholders as per an earlier agreement, and in compliance with commitments made to the European Commission
when agreeing the acquisition of British Energy.
In 2005 British Energy announced a 10-year life extension at Dungeness B, that would see the station continue operating until 2018, and in 2007 announced a 5-year life extension of Hinkley Point B and Hunterston B until 2016.
From 2006 Hinkley Point B and Hunterston B were restricted to about 70% of normal MWe output because of boiler-related problems requiring that they operate at reduced boiler temperatures.
It was announced in December 2009 that new stations would be built at existing land owned around Sizewell and Hinkley Point stations. Dungeness was considered but was thought to be a poor choice for a new build.
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
company by volume, before being taken over by Électricité de France
Électricité de France
Électricité de France S.A. is the second largest French utility company. Headquartered in Paris, France, with €65.2 billion in revenues in 2010, EDF operates a diverse portfolio of 120,000+ megawatts of generation capacity in Europe, Latin America, Asia, the Middle East and Africa.EDF is one of...
(EDF) in 2009. British Energy operated eight former UK state-owned nuclear power stations and one coal fired power station.
From 1 July 2010 the rebranding of British Energy locations and communications to EDF Energy commenced as part of its incorporation into the parent group, following around 17 months of dual branding. This was concluded with the renaming of the operating company from British Energy Generation Limited to EDF Energy Nuclear Generation Limited on 1 July 2011.
Structure
In 2009, the British Energy subsidiary group was structured accordingly:- British Energy Group plc: holding company, a wholly owned subsidiary of EDF S.A.
- British Energy Generation Ltd: dominant subsidiary; owned and ran the large power stations, was licensed to operate nuclear power stations.
- District Energy Ltd: owned four modern 10 MWeMWEMWE may refer to:*Manufacturer's Weight Empty*McDermott Will & Emery*Midwest Express, an airline*Merowe Airport - IATA code*Multiword expressionMWe may refer to:*Megawatt electrical...
natural gasNatural gasNatural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
fuelled power plants. - British Energy Renewables Ltd: participated in a small number of renewable power projects.
- Lewis Wind Power Ltd: joint venture with AMECAMECAMEC plc is a global consultancy, engineering and project management company headquartered in London, United Kingdom. It is focused on the oil and gas, minerals and metals, renewable energy, environment and infrastructure sectors and has offices in 40 countries worldwide...
to develop a proposed wind farmWind farmA wind farm is a group of wind turbines in the same location used to produce electric power. A large wind farm may consist of several hundred individual wind turbines, and cover an extended area of hundreds of square miles, but the land between the turbines may be used for agricultural or other...
on the island of LewisLewisLewis is the northern part of Lewis and Harris, the largest island of the Western Isles or Outer Hebrides of Scotland. The total area of Lewis is ....
.
Early history and development
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 AGRAdvanced gas-cooled reactor
An advanced gas-cooled reactor is a type of nuclear reactor. These are the second generation of British gas-cooled reactors, using graphite as the neutron moderator and carbon dioxide as coolant...
plants from Scottish Nuclear
Scottish Nuclear
Scottish Nuclear was formed as a precursor to the privatization of the Electricity Supply Industry in Scotland on 1 April 1990. It consisted of the nuclear assets of the South of Scotland Electricity Board...
and five AGR
Advanced gas-cooled reactor
An advanced gas-cooled reactor is a type of nuclear reactor. These are the second generation of British gas-cooled reactors, using graphite as the neutron moderator and carbon dioxide as coolant...
and a sole PWR plant from Nuclear Electric
Nuclear Electric
Nuclear Electric was formed as a result of the privatisation of the UK Electricity Supply Industry.When the Central Electricity Generating Board was split up, its power stations were divided between PowerGen and National Power. The nuclear stations, Magnox, AGR and the then under construction...
. The residual Magnox
Magnox
Magnox is a now obsolete type of nuclear power reactor which was designed and is still in use in the United Kingdom, and was exported to other countries, both as a power plant, and, when operated accordingly, as a producer of plutonium for nuclear weapons...
power stations from these two companies were transferred to Magnox Electric which later became the generation division of British Nuclear Fuels. The company was privatised in 1996.
It retained major English technical offices at Barnwood
Barnwood
Barnwood, in Gloucestershire, England is situated on the old Roman road that connects the City of Gloucester with Hucclecote, Brockworth and Cirencester....
, 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 electricity and gas supplier SWALEC
SWALEC
SWALEC was an electricity supply and distribution company which was bought out in 1996 for £872m following the de-regulation of the electricity supply industry in the UK....
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.
British Energy bought the 2,000 MWe
MWE
MWE may refer to:*Manufacturer's Weight Empty*McDermott Will & Emery*Midwest Express, an airline*Merowe Airport - IATA code*Multiword expressionMWe may refer to:*Megawatt electrical...
Eggborough coal fired station
Eggborough Power Station
Eggborough Power Station is a large coal-fired power station in North Yorkshire, England, capable of co-firing biomass. It is siuated on the River Aire, between the towns of Knottingley and Snaith, deriving its name from the nearby village of Eggborough...
from National Power
National Power
- History :National Power was formed following the privatisation of the UK electricity market in 1990. In England and Wales the Central Electricity Generating Board, which was responsible for the generation and transmission of electricity was split into three generating companies Powergen, National...
in 2000 to provide a more flexible power production facility and reduce penalty charge risks from the New Electricity Trading Arrangements
New Electricity Trading Arrangements
New Electricity Trading Arrangements is the name of the system under which electricity is traded in the United Kingdom's electricity market .-Overview:The New Electricity Trading Arrangements came into force on 27th March 2001...
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.
In 2001, the company was the major partner in taking on an operating lease to become the operator of Bruce Nuclear Generating Station
Bruce Nuclear Generating Station
Bruce Nuclear Generating Station is a Canadian nuclear power station located on the eastern shore of Lake Huron, in the communities of Inverhuron and Tiverton, Ontario. It occupies 932 ha of land. The facility derives its name from Bruce County in which it is located, in the former Bruce Township...
in Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. The resultant subisidary was called Bruce Power
Bruce Power
Bruce Power Limited Partnership is a Canadian business partnership composed of several corporations. It exists as a partnership between Cameco Corporation , TransCanada Corporation , BPC Generation Infrastructure Trust , the Power Workers Union and The Society of Energy Professionals...
. As part of financial re-structuring, Bruce Power was sold to a consortium of Canadian investors in February 2003.
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
and the rest of the UK.
Financial difficulties
The company faced financial trouble from 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 LevyClimate Change Levy
The Climate Change Levy is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions, however there have been ongoing calls to replace it with a proper carbon tax.-Scope and...
, and renegotiations of its back-end fuel costs with BNFL
BNFL
British Nuclear Fuels Limited was a nuclear energy and fuels company owned by the UK Government. It was a former manufacturer and transporter of nuclear fuel , ran reactors, generated and sold electricity, reprocessed and managed spent fuel , and decommissioned nuclear plants and other similar...
, 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; who had provided financing for the purchase of the Eggborough coal-fired power plant in 2000.
The plan that resulted from these talks nearly eliminated any equity interest of existing stockholders; the firm's creditors waived over £1bn of debts in return for control of the company. Shareholders received only 2.5% of the shares of the new company.
On 22 September 2004 the UK government's investment of over £3 billion in the restructured firm was approved by the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
. On 24 September 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
The Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...
as a de-facto nationalisation of the group.
Restructuring
Under the British Government's restructuring programme the Nuclear Liabilities FundNuclear Liabilities Fund
The Nuclear Liabilities Fund is a fund of the UK Government to provide arrangements for funding certain long-term costs for the decommissioning of eight nuclear power stations formerly owned by British Energy...
(NLF) acted as a creditor and liability receiver for British Energy Group. In return, a mechanism was put in place whereby NLF could carry out a cash sweep of the organisation and claim 65% of British Energy's available cash flow
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...
each year, on top of a fixed annual contribution. British Energy was allowed to borrow up to £700m under the arrangements, with the NLF providing £275m.
The British Government also assumed British Energy nuclear fuel liabilities worth between £150m and £200m p.a. over ten years. These fuel liabilities extended 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
Energy market
Energy markets are those commodities markets that deal specifically with the trade and supply of energy. Energy market may refer to an electricity market, but can also refer to other sources of energy...
was changed.
The British Government's interest in British Energy at this time was managed by the Shareholder Executive
Shareholder executive
The Shareholder Executive is the body within the British Government responsible for managing the government's financial interest in a range of public companies. Originally established within the Cabinet Office, it has since 2004 been part of the Department for Business...
on behalf of the Department of Trade and Industry (DTI).
The restructuring of British Energy was subject to three National Audit Office reports
National Audit Office (United Kingdom)
The National Audit Office is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments, government agencies and non-departmental public bodies...
; in May 1998, February 2004 and March 2006.
In 2007 the House of Commons Public Accounts Committee reported on the restructuring. They noted that the taxpayer had 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.
Disposal of government interest
In July 2006 the government announced that they were considering selling part of their interest in British Energy. On 30 May 2007 it was announced that the Secretary of State for Trade and IndustrySecretary of State for Trade and Industry
The Secretary of State for Business, Innovation and Skills is a cabinet position in the United Kingdom government. Its secondary title is the President of the Board of Trade...
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. The Fund's cash sweep percentage would be reduced from around 64% to approximately 36% following the sale. Revenue from the sale was used to diversify the Nuclear Liabilities Fund's assets.
Acquisition by EDF
On 24 September 2008, it was announced that Électricité de France (EDF), the state owned French energy company, had agreed a takeover of the company, paying £12.5 billion.Centrica
Centrica
Centrica plc is a multinational utility company, based in the United Kingdom but also with interests in North America. Centrica is the largest supplier of gas to domestic customers in the UK, and one of the largest suppliers of electricity, operating under the trading names "Scottish Gas" in...
purchased a 20% share of British Energy from EDF in August 2009.
On 1 April 2010, EDF transferred the coal-fired Eggborough Power Station
Eggborough Power Station
Eggborough Power Station is a large coal-fired power station in North Yorkshire, England, capable of co-firing biomass. It is siuated on the River Aire, between the towns of Knottingley and Snaith, deriving its name from the nearby village of Eggborough...
to the plant's bondholders as per an earlier agreement, and in compliance with commitments made to the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
when agreeing the acquisition of British Energy.
Operations
At the time of the EDF acquisition, British Energy operated the following power stations:| Power Station | Type | Net MWe | Construction started | Connected to grid | Full operation | Accounting closure date |
|---|---|---|---|---|---|---|
| Dungeness B | AGR | 1110 | 1965 | 1983 | 1985 | 2018 |
| Eggborough Eggborough Power Station Eggborough Power Station is a large coal-fired power station in North Yorkshire, England, capable of co-firing biomass. It is siuated on the River Aire, between the towns of Knottingley and Snaith, deriving its name from the nearby village of Eggborough... |
coal Coal Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure... |
1960 | 1960 | 1967 | 1970 | - |
| Hartlepool | AGR | 1210 | 1968 | 1983 | 1989 | 2019 |
| Heysham 1 | AGR | 1150 | 1970 | 1983 | 1989 | 2014 |
| Heysham 2 | AGR | 1250 | 1980 | 1988 | 1989 | 2023 |
| Hinkley Point B Hinkley Point B nuclear power station Hinkley Point B is a nuclear power station near Bridgwater, Somerset, on the Bristol Channel coast of south west England.-History:The construction of Hinkley Point B, which was undertaken by a consortium known as The Nuclear Power Group , started in 1967. The reactors were supplied by TNPG and the... |
AGR | 1220 | 1967 | 1976 | 1976 | 2016 |
| Hunterston B Hunterston B nuclear power station Hunterston B Power Station is a nuclear power station in North Ayrshire, Scotland. It is located about 9 km south of Largs and about 4 km north-west of West Kilbride. It is operated by EDF Energy... |
AGR | 1190 | 1967 | 1976 | 1976 | 2016 |
| Sizewell B | PWR | 1188 | 1988 | 1995 | 1995 | 2035 |
| Torness Torness nuclear power station Torness nuclear power station was the last of the United Kingdom's second generation nuclear power plants to be commissioned. Construction of this facility began in 1980 for the then South of Scotland Electricity Board and it was commissioned in 1988... |
AGR | 1250 | 1980 | 1988 | 1988 | 2023 |
In 2005 British Energy announced a 10-year life extension at Dungeness B, that would see the station continue operating until 2018, and in 2007 announced a 5-year life extension of Hinkley Point B and Hunterston B until 2016.
From 2006 Hinkley Point B and Hunterston B were restricted to about 70% of normal MWe output because of boiler-related problems requiring that they operate at reduced boiler temperatures.
It was announced in December 2009 that new stations would be built at existing land owned around Sizewell and Hinkley Point stations. Dungeness was considered but was thought to be a poor choice for a new build.
See also
- Nuclear power in the United KingdomNuclear power in the United KingdomNuclear power currently generates around a sixth of the United Kingdom's electricity. As of 2011, the United Kingdom operates 19 nuclear reactors at nine locations...
- Energy use and conservation in the United KingdomEnergy use and conservation in the United KingdomEnergy use in the United Kingdom stood at 3,894.6 kilogrammes of oil equivalent per capita in 2005 compared to a world average of 1,778.0. In 2008, total energy consumed was 9.85 exajoules - around 2% of the estimated 474 EJ worldwide total...
External links
- British Energy Group Plc
- Estimated reactor closure dates, House of LordsHouse of LordsThe House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
HansardHansardHansard is the name of the printed transcripts of parliamentary debates in the Westminster system of government. It is named after Thomas Curson Hansard, an early printer and publisher of these transcripts.-Origins:...
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, NAONational Audit Office (United Kingdom)The National Audit Office is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments, government agencies and non-departmental public bodies...
report HC 943 2005-06