British Energy delay to return shutdown reactors; costs to double UPDATE

LONDON, Jul 17, 2008 (Thomson Financial via COMTEX) -- BGYNY | Quote | Chart | News | PowerRating -- British Energy Group has said it expects a delay to the scheduled return to service of its Hartlepool and Heysham 1 reactors, and for the costs of returning them to service to increase significantly above initial estimates.

At its annual meeting on Thursday, Sir Adrian Montague, chairman of the UK nuclear energy provider, said because of various complexities the reactors will not be back in service until the third quarter of the financial year.

Earlier, British Energy had expected the reactors, which were shutdown in Nov. last year, to come back in a phased process over the second and third quarters.

Initially the cost of returning the reactors to service was estimated at 50 million pounds, but this will increase, Montague told shareholders. British Energy declined to say by how much, though industry sources say it could double to 100 million pounds.

"This is a complex project involving many engineering disciplines, a variety of contract partners and bespoke technical solutions, and we now anticipate, given this complexity, that there will be some slippage in our programme," Montague said.

"Taking into account the work that remains to be completed in the final stages of the project, we now expect the units to return to service in the third quarter of this financial year."

Of the costs, he said: "We now expect that as a result of the number of work hours incurred and the complexity of delivering the engineering solution, the final costs will be significantly higher than this initial estimate."

Last year, British Energy's nuclear output was dented largely by the shutdown of these two reactors, a fall which carried into this year. For the first quarter, nuclear output fell to 9.5 TWh from 13 TWh last time.

"Output from our nuclear stations last year was disappointing," Montague said.

"Our operating performance was significantly challenged by the BCU issue at Hartlepool and Heysham 1, which, together with the ongoing effect of boiler temperature limits at Hinkley Point B and Hunterston B, gave rise to significant losses of output."

edward.mcallister@thomsonreuters.com ejm/am

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