Takeover Collapse Deals Blow to Brown’s Plans for Nuclear Power

By TORCUIL CRICHTON CHIEF UK POLITICAL CORRESPONDENT

GORDON Brown’s plans for a new generation of nuclear power stations to plug the UK’s energy gap received a setback yesterday when talks for a GBP12bn takeover of the nuclear group British Energy by the French power giant EDF collapsed just hours before the deal was due to be announced.

The French attempt to become the biggest energy generator in Britain fell through over price negotiations and, while EDF said it was still interested in acquiring the British nuclear company, the decision probably means an extended delay in the construction of new nuclear stations.

Mr Brown believes nuclear power is an essential part of the energy mix to reduce British dependence on foreign energy supplies and contribute more to the battle against climate change.

British Energy, which owns eight nuclear power plants and generates around onesixth of the UK’s electricity, said “advanced discussions with a party have continued but without agreement to date”.

The proposed deal broke down after two of the UK company’s biggest City shareholders requested EDF put more money on the table.

British Energy, which is 35per cent owned by the UK Government, is seen as a key part of plans to boost Britain’s nuclear energy production, and with the planned takeover EDF was well placed to take a lead role in the country’s nuclear industry.

Business Secretary John Hutton said the government was convinced the EDF offer was still the right deal, but that had not been the view of all the shareholders.

“The government is only a minority shareholder in this publicly listed company, so the board has – quite rightly – overall responsibility to all of the shareholders to try to find the right way forward, ” said Mr Hutton.

Prospect, the largest union in the nuclear industry, urged the government to act urgently and actively to “ensure that what emerges from this situation is in the long-term public interest for secure and sustainable energy, not shortterm shareholder profit”.

Prospect general secretary Paul Noon said: “We do not have the luxury of time. Failure to act now will result in huge problems over the next 10 years, with the UK reliant on imported gas and oil – a situation that would be an environmental, economic and political disaster.”

The new plants are likely to be built on the sites of the existing power stations owned by British Energy although not at Hunterston B in Ayrshire or Torness in East Lothian because of likely planning obstacles that would be put in the way by the devolved Scottish Parliament.

News of the nuclear deal collapse broke as the government came under renewed pressure to consider a windfall tax on energy companies.

There has been a growing clamour for a windfall tax among Labour MPs, fuelled by evidence that energy companies are making huge profits at a time when bills for consumers are rising sharply.

British Gas announced a 35per cent price rise for customers this week as Centrica, its parent company, unveiled profits of GBP992m for the first half of this year.

The Scottish Government yesterday added to its campaign for a fuel price regulator to decrease taxation as pump prices rise by releasing figures showing the rise in petrol costs for emergency services.

The figures, released in response to a parliamentary question from SNP MSP Nigel Don, demonstrate fuel expenses for the police in Scotland increased from just over GBP5m in 1999-2000 to an estimated GBP7.5m this year while costs for the fire service have risen from GBP1.3m to GBP2.3m over the same period. Likewise the ambulance service has undergone a rise from GBP2.8m in 1998-99 to GBP5.6m last year.

Originally published by Newsquest Media Group.

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