Monday, February 27, 2006

Taxpayers' subsidy of nuclear power increases as industry profits rise

The bill to clean up the UK's existing nuclear sites has risen by by £956m to £5.3bn. But British Energy's profits are increasing yet they won't have to pay a penny more.

British Energy is indemnified by the government against any shortfall in the nuclear liabilities fund which meets the clean up costs. In return British Energy contributes 65% of its net cash flow to the fund.

But although the liabilities have increased the company will not have to pay more to the fund. This is despite the fact that British Energy's operating profits are rising due to higher fuel prices: for the nine months to January 1 they were £377m, with £242m coming in the third quarter.

Why on earth nuclear electricity's prices should rise just because oil prices have is a mystery of capitalism which strikes the Low Carbon Kid as bizarre - isn't competition meant to drive prices down?

BE has eight nuclear power plants and one coal fired station. It has pre-sold all its planned output for the current financial year at an average price of £33.3 per megawatt hour - and has sold 60% of next year's output at an average price of £37.8 per megawatt hour. But it's still experiencing shutdowns due to malfunctions.

These artificial profits, underwritten increasingly by the taxpayer, you and I, are but a small taste of what's to come if we go down the nuclear route. The government should force BE to pay more towards clean-up.

But that would make it look unprofitable, and we can't have that when Tony wants to build more nuclear power stations.

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