U.S. News

British Energy Sees Repairs Disruption Until March

Mark Potter

British Energy said on Wednesday repair work on two of its nuclear power stations would take until the end of March, the worst of a range of scenarios it presented only last month, hitting its shares.

Britain's biggest power producer, whose shares plunged in October after it announced problems with cracked boiler pipes at its Hunterston and Hinkley plants, said it had found a small number of defects in another boiler component -- tail pipes.

The firm said it had repaired these components at the R4 reactor of its Hinkley Point B plant in western England.

But work was continuing at its R4 reactor at Hunterston B in Scotland and it would conduct further inspections at the R3 reactors at both plants, it said in a statement.

"The company is now working towards a return to service of all four units by the end of March 2007, subject to approval of the associated safety cases and assuming no further unexpected problems are identified by the inspections," it said.

British Energy said in November that its best case scenario was for the units to return to service this month.

At 0925 GMT, its shares were down 6.3 percent at 537-1/2 pence, after touching a low of 535 pence.

"The fact they are not getting the plants back on line until the end of this financial year, is the worst case...they were talking about," said JP Morgan analyst Ian Mitchell.

However, he was reassured the firm had not found any further cracking of boiler pipes in its inspections.

British Energy, capable of providing a fifth of Britain's electricity needs, said the impact of repairs on output in the year to March 31 was still within its range of expectations.

Last month, the firm said the repair work would cut annual output to between 48 and 56 terawatt hours (TWh), between 11 percent and 23 percent lower than previously anticipated.

JP Morgan's Mitchell kept an "overweight" rating on British Energy shares, saying the firm's prospects were underpinned by high electricity prices and the rising cost of gas.

"But if you're a bear on this stock, then you just turn round and say...again management has told me one thing and it has come in either worse or as bad as it could be in their guidance."

British Energy also said it planned to bring forward the work intended for the planned outage of both units at Hunterston B in May 2007. This would have a positive impact in its next financial year, it said.