British Energy hit by mounting losses

British Energy, the troubled power company, said yesterday its losses had ballooned over the past six months and warned that its future prospects remained challenging.

British Energy, the troubled power company, said yesterday its losses had ballooned over the past six months and warned that its future prospects remained challenging.

The company said the unexpected closure of two of its nuclear power stations, which were forced to halt production while safety inspections were carried out, helped push half-year pre-tax losses at the company to £234m. This is nearly four times its £60m of losses in the same period last year.

The group's woes have been compounded by the sharp rise in electricity prices this year. While many power companies have reaped the benefit of rising wholesale prices, British Energy had forward sold most of its outage at much lower prices during the course of last year. To meet its obligations while its own power stations were out of action, British Energy has actually had to buy power in the wholesale markets at these high prices.

The outages at the Hartlepool and Heysham plants led to an 11 per cent fall in electricity output for the first half of the year to 31.7 terawatt hours. "We currently expect that those stations will not return to service until later this calendar year. The outlook for the company's financial and trading prospects for the remainder of the financial year will be challenging," the company said in a statement.

British Energy has been teetering towards bankruptcy since 2002, and has received support from the Government to help it stay afloat. Crippled by its borrowings, the company has had to suspend its shares and is in the process of carrying out a debt-for-equity swap that will leave 97.5 per cent of the company in the hands of creditors. "Progress has been made towards the completion of the proposed restructuring, but it still remains subject to a number of significant uncertainties," the company said. The restructuring is due to complete in March next year.