British energy warnings 'not heeded'

Warnings over future liabilities at the nuclear generator British Energy were not properly heeded by a British government department, according to a report out today.

Warnings over future liabilities at the nuclear generator British Energy were not properly heeded by a British government department, according to a report out today.

The National Audit Office said it warned in 1998 that taxpayers would be liable to meet nuclear decommissioning costs in the event of difficulties at the recently privatised British Energy (BE).

The company, which operates plants including Hinkley Point and Sizewell, is currently in a battle for survival after agreeing a rescue package in October that would see the Government meet some of its decommissioning liabilities.

Today’s report said BE was at first monitored with a “light touch” by the Department of Trade & Industry (DTI) before officials adopted a “wait and see” approach when mixed messages emerged from the firm between 2000 and 2002.

nd changes introduced by the government to extend competition in the electricity market also contributed to the company’s problems.

John Bourn, head of the National Audit Office, said it was “regrettable” that risks identified in his report of 1998 had now materialised.

He added: “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.”

Today’s report came ahead of a Public Accounts Committee meeting with British Energy chairman Adrian Montague and Sir Robin Young, DTI permanent secretary.

Edward Leigh, chairman, said his committee had “explicitly warned” that the taxpayer would still have ultimate responsibility for the costs of treating and disposing of nuclear fuel and the decommissioning of power stations.

He added: “We told the DTI to keep careful watch over British Energy. Instead, for several years, the DTI seems to have assumed the ostrich position, with head firmly buried in the sand.

“It is inexcusable that the DTI did not follow through on its commitment to my committee that it would ‘carefully monitor the company’s abilities to meet its liabilities’.”

The DTI said it would not be commenting on the matter ahead of next week’s Public Accounts Committee meeting.

Liberal Democrat Trade spokesman Malcolm Bruce added: “This report shows that British Energy continued to pay dividends that the company’s performance could not justify.

“At the same time the DTI failed to realise the effect the new market for electricity would have on British Energy’s profitability and the exposure of taxpayers to the company’s nuclear liabilities.”

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