20 July 2007
Taxpayers face a 'significant risk' following the restructuring of British Energy, with the cost of Britain's £5.3bn nuclear decommissioning liabilities expected to soar, MPs have warned.
The Public Accounts Committee published a study on July 19 into the future of British Energy, which was privatised in 1996 and rescued through a government-backed restructuring plan in 2002.
The MPs claim that taxpayers' liabilities increased by 29% during a recent reassessment of BE's financial position, 'a figure that may well rise further' because of uncertainties over the future costs of nuclear decommissioning.
That uncertainty is exacerbated because the two government departments with oversight of BE, the former Department for Trade and Industry and the Treasury, used different formulas to estimate future liabilities, the committee reports.
PAC chair Edward Leigh said: 'Upon privatisation, British Energy took on full responsibility for its nuclear power stations, including associated nuclear liabilities. In actual fact, from 2002… those liabilities, uncertain in size but valued at £5.3bn in 2006, have been underwritten by the taxpayer.'
British Energy is the UK's largest electricity supplier, generating 20% of its supplies through eight nuclear power stations. Under a global agreement, states using nuclear power are committed to assisting energy providers to ensure security of supplies, and the general security of the sites, if a business failure is possible.
Some critics have claimed that makes a mockery of the privatisation of such energy companies because there is little risk transfer to the private sector.
Leigh acknowledged that under the restructuring agreement, BE must pay a significant amount of its future profits into the fund from which nuclear liabilities will be financed, reducing the cost to taxpayers.
PFjul2007
