British Energy shuts two reactors

Nuclear sell-off blow: Power stations taken out of operation to look for weld cracks hours after the public share offer closes

The risks of investing in nuclear privatisation were highlighted yesterday when, only hours after the public offer to buy shares in British Energy had closed, the company confirmed it had shut down two more reactors.

The shutdowns at Hinkley B and Hunterston B - to look for weld cracks - mean two of the eight nuclear power stations being sold off are now out of operation just as the controversial privatisation process, billed in television advertisements as a final, athletic burst of energy, dips for the finishing line.

News of the shutdowns could not have come at a more embarrassing time for British Energy. Over 520,000 applications for shares in the company had been received by the time the offer closed at noon yesterday.

With the retail offer over twice subscribed, the amount of shares being made available to private investors will be increased substantially above the 30 per cent already set aside. Institutional investors have until tomorrow to decide how much to bid for British Energy.

The sell-off is expected to raise between pounds 1.26bn and pounds 1.96bn for the Treasury - less than the pounds 2.6bn it cost to build the Sizewell B pressurised water reactor (PWR), the most modern nuclear station being privatised.

British Energy denied that news of the additional shutdowns had been deliberately kept back until the deadline for private investors to subscribe had passed. "There was every intention that the announcement was going to be made today," a spokesman said. "It's a purely a precautionary measure. There are no safety implications."

However, environmental pressure group Friends of the Earth seized on news of the shutdowns to renew its attack on the privatisation. "The AGRs [advanced gas cooled reactors] have an appaling history of technical problems," a spokeswoman said. "They are meant to be the cash cows generating dividends for investors, but it doesn't look like that now. It also raises questions not only about public safety but also British Energy's ability to meet the enormous radioactive waste liabilities."

All four reactors, two at Hunterston B and two at Hinkley B, are now out of action following statutory shutdowns for weld inspections at two of the reactors which began last month.

British Energy indicated that the timing of the decision to shut down the reactors was a commercial one. "The inspection programme and, if necessary, any weld repairs, will therefore be undertaken during the summer season when electricity demand and prices are lower."

The company added that the additional work will result in some output loss but said contingency plans had already been made. The British Energy prospectus listed the main technical issues affecting AGR as reheat cracking, carbon deposition and graphite core integrity.

The latest shutdowns relate to the formation of cracks in welds which are subjected to high temperatures.

"To date," the prospectus states, "reheat cracking has been found at Heysham 1, Hartlepool, Dungeness B and Hunterston B". It adds that no signs of reheat cracking were found at Hinkley B.

According to the prospectus, the reheat crack at Hunterston B will cost about pounds 3.7m to replace, excluding lost output.

Only the most modern nuclear power stations - the seven AGRs and Sizewell B - are being sold off. The older Magnox stations will remain in the government's hands.

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