The Pit Closures: Nuclear power 'is victim of Whitehall quick-fix'

THE HEAD of Britain's largest nuclear generator has attacked the Government's lack of a coherent energy policy, and said that nuclear and coal are both victims of the Whitehall 'quick-fix' approach to the energy industries.

Bob Hawley, chief executive of state-owned Nuclear Electric, launched a staunch defence of his company, which has been blamed in part for the demise of British Coal. He said Nuclear Electric became the 'Cinderella and then the wastepaper basket' of the electricity industry in the approach to privatisation, becoming a repository for the problems to ensure a more successful sale. He feels this is why the company has failed to get its message across.

He also defended Nuclear Electric's pounds 1.2bn subsidy, saying it is needed because the Government set the company up with all the historic nuclear liabilities of the former Central Electricity Generating Board, but none of the provisions which the CEGB had made to cover those liabilities.

These include decommissioning of nuclear power stations and waste disposal. The provisions needed to cover liabilities related to the old CEGB are estimated to be about pounds 9bn, Mr Hawley said.

He added that the company is responsible for liabilities related to current operations and cannot use the levy to cover those. These amount to about pounds 5bn between 1990, when Nuclear Electric became a company in its own right, and 1998. This will mean that Nuclear Electric will have accumulated a loss of pounds 2.5bn by then instead if making pounds 2.5bn profit.

The cost of decommissioning and waste disposal caused the Government to pull Nuclear Electric out of electricity privatisation at the last minute. It now accounts for 22 per cent of the electricity generating market despite producing electricity at a higher cost than modern coal-fired plant.

However, Mr Hawley said that both coal and nuclear are needed for a balanced fuel portfolio and for environmental reasons. Unlike fossil fuel generation, nuclear emits no carbon dioxide or acid pollutants. And the company said that within a few years it will be producing power at a lower cost than coal or gas stations.

Meanwhile, the debacle over energy policy was thrown further into the spotlight yesterday when Offer, the electricity watchdog, launched a review of plans to close power plants. Professor Stephen Littlechild, its director-general, said he would appoint an independent adviser to decide whether National Power and PowerGen are justified in closing the plant, most of which is coal-fired.