Nuclear sell off-gets green light

The Government yesterday approved the £3bn privatisation of the nuclear industry, which will be carried out after a controversial merger of Nuclear Electric with Scottish Nuclear.

But the electricity regulator, Professor Stephen Littlechild, is likely to react with dismay. He has told the Government he is against any further concentration in the generating market.

The combined company would have a UK market share of 22 per cent, according to Nuclear Electric, and a share of about 18 per cent in England and Wales. The headquarters will be in Edinburgh - a move intended to avert fears over job losses in Scotland and the loss of Scottish identity.

The decision, to be formally announced on Tuesday, is a bitter blow to Scottish Nuclear, which has lobbied fiercely for its independence. Robin Jeffrey, chief executive, has said between 300 and 400 jobs are at risk in Scotland in the merger.

Plans to merge Nuclear Electric and Scottish Nuclear are likely to dismay Professor Littlechild, who is against any concentration of interests in the generating market.

It is believed that the Government plans to complete the sale by next summer. Should the rumoured price tag of £2bn to £3bn be achieved, it would allow a cut of about 1.5p on the standard tax rate.

Plans for the privatisation have been revived in spite of billions of pounds of liabilities in the industry relating to decommissing and nuclear waste management. City nerves over the extent and uncertainty of these liabilities caused nuclear to be suddenly pulled from the privatisation of the electricity industry five years ago.

The main difference this time is that the Government is expected to retain Nuclear Electric's older Magnox reactors in a separate state-owned company, ring-fencing liabilities that are thought to be in the region of £9bn. Both Nuclear Electric and Scottish Nuclear have also increased their efficiency substantially and believe they can compete in the generating marketplace.

The liabilities relating to Nuclear Electric's five advanced gas-cooled reactors and the new pressurised water reactor at Sizewell in Suffolk would amount to about £6bn at the time of privatisation. Scottish Nuclear has two AGRs in operation and has liabilities of £1.8bn. About £700m of those are thought to relate to an old Magnox station, which will probably remain in state ownership.

The consensus in the City is that the Government will be able to sell the industry if the price is low enough. One analyst said: "I think they can do it but the crucial thing is what liabilities the Government will keep. This time around things are better quantified but the basic issues have not changed." He added: "The Government has set its heart on tax cuts and of they do not come from privatisations where do they come from?"

Another analyst said: "It has got to have to be on a very generous yield." He said that it was far too early to speculate on a price as investors would also be watching for the outcome of the review of electricity prices by the regulator, Professor Littlechild. There is also some nervousness that Professor Littlechild will refer National Power and PowerGen to the Monopolies and Mergers Commission if they fail to meet his demand that they sell some power plants.

Professor Littlechild, who in the past suggested that the two companies swap power stations to increase competition north and south of the border, would have the power to refer the new organisation to the MMC. This could, however, be overturned by Michael Heseltine, the President of the Board of Trade.

The Government will also announce an early end to the £1bn annual subsidy for Nuclear Electric, raised through a levy on electricity bills. The move would allow a cut of about eight per cent on electricity bills in England and Wales but would raise questions about the funding for decommissioning Magnox plants and treating their fuel.

Life and Style
Small winemakers say the restriction makes it hard to sell overseas
food + drink
Arts and Entertainment
A comedy show alumni who has gone on to be a big star, Jon Stewart
tvRival television sketch shows vie for influential alumni
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
Clare Balding
peopleClare Balding on how women's football is shaking up sport
PROMOTED VIDEO
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
News
i100
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
Life and Style
fashionThe Christmas jumper is in fashion, but should you wear your religion on your sleeve?
News
ebooksNow available in paperback
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
Sport
Tony Bellew (left) and Nathan Cleverly clash at the Echo Arena in Liverpool
boxingLate surge sees Liverpudlian move into world title contention
Voices
Neil Findlay
voicesThe vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Life and Style
food + drinkMeat-free recipes and food scandals help one growing sector
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin