British Energy earnings drop

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Nuclear power firm British Energy reported a sharp fall in annual earnings today after two of its stations went offline last year.

The technical issues at Hartlepool and Heysham 1, following the emergence of wire corrosion problems within boiler units, meant total output for the financial year to 31 March was unchanged at 58.4 terawatt hours (TWh).

British Energy said the output figure masked a better overall operating performance, with progress in the management of small generation losses.

Underlying earnings were down to £882m from £1.22bn a year earlier, although this was a smaller decline than anticipated in the City.

The company, which operates eight nuclear power stations, said this month that it needed several weeks to consider a range of takeover proposals.

British Energy's attraction to bidders, such as France's EDF, lies in its existing sites and the role they may play in the proposed development of the next generation of nuclear power supply.

The company is evaluating all of its sites, with four priority locations for new build units being considered in the south of England - at Sizewell, Hinkley Point, Dungeness and Bradwell in Essex.

Annual earnings were also impacted by lower fixed-price contracts, while the outages at Hartlepool and Heysham 1 meant the company incurred £70m buying power elsewhere to meet its contractual obligations.

British Energy said it expected all four units at the two sites to be back in service by the end of this calendar year. To date, more than 660,000 man hours have been spent inspecting and assessing the condition of the wire windings on all 32 boiler closure units at the two locations.

The work will cost £50m in the current financial year, on top of the £20m seen in the previous 12 month period.

Chief executive Bill Coley said the company had made good "operational progress" despite the disappointing financial performance.

He added: "We are well positioned to manage our existing fleet to best advantage and look ahead to playing a pivotal role in the new build programme."