British Energy to buy nuclear stations in US

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British Energy yesterday unveiled its biggest expansion since privatisation last year, with a venture to buy and operate several nuclear power stations in the US.

The nuclear group has formed a joint venture business to acquire the stations, called AmerGen, with its US partner, the Philadelphia utility group Peco Energy. Robin Jeffrey, British Energy's deputy chairman, said in Washington last night that the new company was already in discussions with several other power businesses to buy nuclear stations.

"We're looking at a number of plants and are talking to the owners. This is not to acquire a single plant. Peco on their own could do that. It's bigger than that. We're not going to buy one plant and pull up stumps," said Mr Jeffrey.

Mr Jeffrey said AmerGen was not planning to buy Peco's existing nuclear stations, but was examining some of the other 106 nuclear generating plants across the US. Peco, which began exploring investment opportunities with British Energy last October, wholly owns a nuclear station at Limerick in Pennsylvania and has 42.5 per cent stakes in two more, at Peach Bottom in the same state and Salem in New Jersey.

The move into the US followed the decision by a consortium including British Energy to pull out of the bidding for a coal generating plant in Australia. Mr Jeffrey said one of the reasons for the switch to nuclear acquisitions was the high price of fossil fuel generating capacity. "Fossil generation at the moment is a sellers' market," he said.

British Energy will use its expertise gained from boosting the performance of its reactors. Since the sell-off last year the output of its gas-cooled stations, and the Sizewell B pressurised water reactor, have exceeded analysts expectations.

The company declined to say how much cash it expected to inject into AmerGen, or the liabilities it would take on from buying power plants. Mr Jeffrey said British Energy's investment would depend on the age of the stations acquired and their future decommissioning costs.

Separately, Magnox Electric, the state-owned nuclear generator split off from British Energy on privatisation, announced a big reduction in the hole in its balance sheet after a cut in its decommissioning liabilities. In the year to the end of March the black hole in its accounts shrank from pounds 1.33bn to pounds 682m, largely because of cheaper decommissioning contracts with British Nuclear Fuels.

Magnox's total liabilities dropped from pounds 8.9bn to pounds 8.4bn, while the value of its investments rose by pounds 500m to pounds 3.44bn. The remaining assets, in the form of a guarantee from the government to cover some liabilities, was uprated by 4.5 per cent from pounds 3.7bn to pounds 4bn. Mark Baker, chairman, said that in two years the deficit would be wiped out.