`Sweetheart' Energy sales under threat

A new cloud appeared above today's publication of the prospectus for the pounds 1.5bn-pounds 2bn flotation of British Energy after it emerged that Labour was ready to reform what it claimed were "sweetheart" arrangements under which it sells most of its electricity.

The news came as the state-owned nuclear electricity generator prepared to reveal that shareholders would receive an initial dividend yield comparable to the 19 per cent available to investors in the recent Railtrack flotation.

John Battle, Labour spokesman, called for the flotation to be abandoned, describing it as a bad deal for shareholders and taxpayers. He gave notice that a Labour government would look again at the operation of the electricity price pool, which sets marginal prices, given the guarantee it makes to ensure British Energy receives the best available price for its output.

The terms under which the pool operates ensure that all British Energy's eight power stations are always connected to the National Grid as part of the so-called "base load supply". The price it receives fluctuates with the pool price.

Mr Battle said: "I think it's not working and most people believe it's not working. It is a sweetheart deal for nuclear and I see no reason why that should continue."

He claimed the Government was desperate to sell the business to finance tax cuts. It was being sold for less than the cost of Sizewell B, the Suffolk nuclear power station commissioned earlier this year, and yet it was generating large amounts of cash. Meanwhile, the Government is keeping responsibility for the older Magnox power stations.

"By and large, the liabilities are being left with the taxpayer for 135 years so they are keeping back the real liabilities and selling off the cash-generating assets," Mr Battle said.

But advisers to British Energy said Labour's criticism of the Pool "sounded muddled" as all participants shared in the risks and benefits of the system equally. The prospectus will, however, include a section devoted to Labour policy pronouncements on British Energy, most of which have been hostile.

As with Railtrack, investors are set to achieve a high initial yield on the shares after the flotation. The first two dividends will be payable in January and July of next year, well before the second instalment is due on the shares in September. Sources yesterday suggested the yield, putting the two payments together, would be similar to the 18.8 per cent achieved by Railtrack investors, equivalent to a rate of 25 per cent on an annualised basis. Analysts expect the trading yield to settle at between 7.5 and 8 per cent.

Today's document will reveal the size of the first instalment to be paid on the shares, with small investors receiving a discount, although the size will not be set until 26 June.

Suggested Topics
News
people
News
Michael Buerk in the I'm A Celebrity jungle 2014
people
News
news

Lincoln MP Karl McCartney 'denied all knowledge' of the Twitter activity

News
The author PD James, who died on 27 November 2014
people

Detective novelist who wrote Death comes to Pemberley passed away peacefully at her home, aged 94

PROMOTED VIDEO
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
Life and Style
View of champagne glasses at a beach bar set up along the Croisette during the 66th edition of the Cannes Film Festival in Cannes on May 17, 2013
food + drink(and for now, there's a clear winner)
News
Happy in his hat: Pharrell Williams
people
Arts and Entertainment
Avatar grossed $2.8bn at the box office after its release in 2009
filmJames Cameron is excited
Arts and Entertainment
Jennifer Lawrence as Katniss Everdeen in The Hunger Games: Mockingjay Part 1
arts + ents
Life and Style
tech

Sites using the popular Gigya comment platform were attacked by the Syrian Electronic Army (SEA)

News
ebooksNow available in paperback
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

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Ampersand Consulting LLP: UI Designer/ User Interface Designer (UI, User Flow, Design)

£6000 - £60000 per annum + Bonus and Benefits: Ampersand Consulting LLP: UI De...

SThree: The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?