Energy shares in new setback

The meltdown in British Energy shares continued unabated yesterday as Labour claimed that the company knew it would have to close two of its eight nuclear reactors ten days before the announcement was made public.

Labour said that a copy of Hinkley Point News, the internal newsletter at the Hinkley Point station in Somerset, showed that staff were told on 1 July about problems with cracks in pipe welds that could require an extension to the statutory outage at the station.

The closure of Hinkley Point and its sister station Hunterston B hours after the close of the public offer of shares in British Energy is widely blamed for the decision of many City institutions to shun the offer.

Since trading began on Monday morning the value of the partly paid shares has dropped by 13.5 per cent, wiping nearly pounds 70m off its market capitalisation.

By last night's market close the shares had fallen by another 3p to 91p after touching 87.5p at one stage. Small investors who paid a first instalment of 100p are now looking at a pounds 90 loss on the maximum allocation of 600 shares while the loss on the minimum application of 300 shares is pounds 45.

The Government's financial advisers on the flotation, BZW, pinned the blame for the continuing decline on the overall drop in the London market prompted by the plunge in the Dow Jones.

British Energy shares were again the most heavily traded on the market with just under 15 million changing hands although volumes were sharply down on Tuesday when 80 million shares were sold in a day of frenetic activity.

A spokesman for British Energy said last night that its investigations at the Hunterston B and Hinkley Point stations were now more than half completed and no new weld cracking problems had been encountered.

Provided no more cracks are discovered the two stations are expected to resume operation late next week.