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Serious nuclear leaks spark £800m loss
Last updated at 23:22pm on 16.10.06
Nuclear power station: Cracked pipes at two plants prompted a shut down and a crash in the company's share price
Two nuclear power stations had to be shut down over cracks found in pipes at the plants prompting safety concerns and panic selling in the City.
British Energy said it had found cracks in the boiler tubes of one of its Hinkley Point reactors in Somerset and needed to inspect two others.
It also said it was investigating "a significant leak in an underground cast iron pipe in the cooling water systems at Hartlepool," in northeast England.
The news dismayed environmental campaigners, who called on Tony Blair to suspend his plans to build a new generation of nuclear power plants.
Shares in the company, which provides a fifth of Britain's electricity, slumped by nearly a quarter - wiping nearly £800m off its value - as the markets punished the ailing power generator for a run of maintenance problems.
A significant number of the company's reactors are now either out of action or have had their electricity generation reduced to allow inspections and repairs.
Only one of its eight nuclear power stations is working at full capacity. In addition to the two closures, five other stations are working at just 20pc of output.
The company's loss raised questions about Gordon Brown's hopes of selling off the Government's 65 per cent stake.
The Chancellor announced in the Budget in March that the sale was being considered, and the Treasury has appointed bankers to advise on the deal. He had hoped to raise up to £3bn.
He has also backed Government moves to allow the building of a new range of reactors to replace ageing plants that are due to close in the next decade.
Last night a British Energy spokesman denied any risks to public safety, saying the boiler tubes were cracked but not leaking, and that the water leak in Hartlepool was "non nuclear".
British Energy ordered an inspection last month after announcing that it had found boiler tube cracking in the R3 unit of its Hunterston B power station in Scotland.
The company said yesterday a similar problem found at the R3 reactor of the Hinkley Point B plant in Somerset was "at the high end of the range previously experienced".
And it confirmed that it would now have to inspect pipes at two other reactors at Hunterston B and Hinkley B.
In a statement the company said: "The output of Hunterston B R4 and Hinkley B R4 has been lowered and preparations are being made to shut down the units for inspections and to undertake any repair work required so as to be satisfied as to the integrity of the boilers."
By last night shares in BE had closed down 24 per cent, after £762m was wiped off the company's market value. The shares finished down 133.5p at 427p.
The Government has lavished cash on British Energy to make it more attractive for investors, and has agreed to take on the liability for decommissioning its plants in exchange for a guaranteed share of its future income.
The company is spending vast sums on repairs and modernisation in an attempt to satisfy its projections of how much electricity it can generate.
The Government wants to build as many as ten new reactors on the site of existing plants, but faces an uphill battle to convince sceptical Labour MPs who say it should be putting more effort into developing renewable forms of energy.
A spokesman for Friends of the Earth said: "What makes us uneasy is the idea that the Government wants to build more nuclear plants.
"What this shows is that the nuclear industry is prone to accidents. Nuclear power is complicated and a dangerous thing.
"As a result it has always been more expensive, more unreliable and more prone to accidents, and no amount of spinning can change that.
"It seems to use to be madness that the Government is promoting nuclear when there are so many better alternatives."
The Department of Trade and Industry stressed today that the reactor closures would not leave the country short of electricity.
A Government spokeswoman said: "National Grid is there to balance supply and demand. We would expect the market to respond by bringing on other sources of generation to fill this gap."
