Menu
06/02/2004
Government failed to monitor British Energy's problems, say NAO
The government failed to monitor troubled nuclear power station operator British Energy closely enough as financial problems within the company grew, the National Audit Office (NAO) has said.
In a report published today NAO said that changes introduced by government to extend competition in the electricity market had either reduced British Energy’s income or increased its costs.
The resulting financial crisis plunged the struggling company into debt and forced a government-backed £410 million bail-out in 2002.
The report said that the Department of Industry (DTI) had failed to evaluate the effect of these changes on British Energy. And, when cracks did start to appear, due to its role in ensuring free and open competition the department did not intervene as this could have been construed as anti-competitive.
Head of the NAO, Sir John Bourne, said: "It is regrettable that risks identified in my report of 1998 have materialised. British Energy’s actions contributed significantly to its difficulties, and the Department was constrained in what it could do. But this case highlights the importance of monitoring and managing previously identified risks to ensure that the taxpayer is well protected."
Despite stepping up monitoring, faced with uncertainty over mixed messages from the company, the DTI had adopted a "wait and see" approach.
In the period March to September 2002, the department’s advisers, who had looked at British Energy's problems, decided that given recent falls in electricity prices, the company was "highly vulnerable". But the department policy remained one of non-intervention unless the company was in a position of "publicly evident distress". Contingency plans were prepared to ensure nuclear safety and the supply of electricity.
The NAO said that British Energy had not responded effectively to changes in the market and attempts to enter the domestic supply market were "too little, too late".
In September 2002, British Energy’s directors declared that the company was no longer able to meet its liabilities and the government extended a credit facility of up to £410 million.
In October 2003, British Energy formally agreed a restructuring deal with its key creditors and the government.
British Energy, the largest electricity generator in the UK, has an annual turnover of over £2 billion and operates eight nuclear stations generating around a fifth of the electricity used in England & Wales, and half that used in Scotland.
(SP)
In a report published today NAO said that changes introduced by government to extend competition in the electricity market had either reduced British Energy’s income or increased its costs.
The resulting financial crisis plunged the struggling company into debt and forced a government-backed £410 million bail-out in 2002.
The report said that the Department of Industry (DTI) had failed to evaluate the effect of these changes on British Energy. And, when cracks did start to appear, due to its role in ensuring free and open competition the department did not intervene as this could have been construed as anti-competitive.
Head of the NAO, Sir John Bourne, said: "It is regrettable that risks identified in my report of 1998 have materialised. British Energy’s actions contributed significantly to its difficulties, and the Department was constrained in what it could do. But this case highlights the importance of monitoring and managing previously identified risks to ensure that the taxpayer is well protected."
Despite stepping up monitoring, faced with uncertainty over mixed messages from the company, the DTI had adopted a "wait and see" approach.
In the period March to September 2002, the department’s advisers, who had looked at British Energy's problems, decided that given recent falls in electricity prices, the company was "highly vulnerable". But the department policy remained one of non-intervention unless the company was in a position of "publicly evident distress". Contingency plans were prepared to ensure nuclear safety and the supply of electricity.
The NAO said that British Energy had not responded effectively to changes in the market and attempts to enter the domestic supply market were "too little, too late".
In September 2002, British Energy’s directors declared that the company was no longer able to meet its liabilities and the government extended a credit facility of up to £410 million.
In October 2003, British Energy formally agreed a restructuring deal with its key creditors and the government.
British Energy, the largest electricity generator in the UK, has an annual turnover of over £2 billion and operates eight nuclear stations generating around a fifth of the electricity used in England & Wales, and half that used in Scotland.
(SP)
Related UK National News Stories
Click here for the latest headlines.
24 September 2008
EDF To Takeover British Energy
The Government welcomed EDF's proposed £12.5 billion takeover offer for British Energy Group and the British Energy Board's recommendation of the offer to its shareholders. The Government has committed to accept the cash offer of 774p per share for its 36% stake held by the Nuclear Liabilities Fund (NLF), subject to certain conditions.
EDF To Takeover British Energy
The Government welcomed EDF's proposed £12.5 billion takeover offer for British Energy Group and the British Energy Board's recommendation of the offer to its shareholders. The Government has committed to accept the cash offer of 774p per share for its 36% stake held by the Nuclear Liabilities Fund (NLF), subject to certain conditions.
03 June 2003
Emergency lighting dims as British Energy reports £4.29bn loss
British Energy has announced dismal pre-tax losses of £4.29 billion for the year ending March 2003 - compared to £493 million losses in 2001-2002.
Emergency lighting dims as British Energy reports £4.29bn loss
British Energy has announced dismal pre-tax losses of £4.29 billion for the year ending March 2003 - compared to £493 million losses in 2001-2002.
09 March 2011
Major UK Studios Fund British Films
Film and Television Studios Group Pinewood Shepperton have announced plans to provide funding for smaller British film productions.
Major UK Studios Fund British Films
Film and Television Studios Group Pinewood Shepperton have announced plans to provide funding for smaller British film productions.
10 September 2007
Brown To Unveil Plan To Create 500,000 Jobs
Prime Minister Gordon Brown is set to unveil plans to create half a million new jobs in an effort to have "A British job for every British worker.
Brown To Unveil Plan To Create 500,000 Jobs
Prime Minister Gordon Brown is set to unveil plans to create half a million new jobs in an effort to have "A British job for every British worker.
13 August 2003
BA suspends flights to Saudi Arabia over 'security concerns'
British Airways has announced that it is to suspend all flights to Saudi Arabia "due to heightened security concerns in the region". BA said that it would suspend flights until further notice follows discussions earlier today between the airline and the British government's Department for Transport.
BA suspends flights to Saudi Arabia over 'security concerns'
British Airways has announced that it is to suspend all flights to Saudi Arabia "due to heightened security concerns in the region". BA said that it would suspend flights until further notice follows discussions earlier today between the airline and the British government's Department for Transport.
-
Northern Ireland WeatherToday:A chilly start with a widespread frost and some freezing fog, any freezing fog slow to clear. Otherwise bright with sunny spells and coastal showers. Light winds. Maximum temperature 6 °C.Tonight:Coastal showers dying out with a widespread frost developing along with freezing fog, which could become extensive. Winds remaining light. Minimum temperature -3 °C.
