British Energy at record low on reactor closure

British Energy shares slumped to an all-time low yesterday after the nuclear electricity generator was forced to shut down its Torness reactor in Scotland because of safety problems.

The announcement prompted a 30 per cent decline in the company's share price to 63p as fears hit the market that a sister plant at Heysham in Lancashire may have to be closed for similar reasons.

British Energy had already closed one of the two reactors at the Torness AGR station after the failure of the gas circulators which cool the reactor. Yesterday it disclosed that the other reactor had also been shut down at Monday lunchtime after the gas circulator began to vibrate.

This is the second blow to the company's generating plans this month. Two weeks ago it announced an unplanned outage or shutdown of Dungeness B station in Kent.

A spokesman said British Energy was now undertaking a review of the gas circulators at Heysham, which are of a similar design to those at Torness, to establish whether they could be affected by the same problem.

Later British Energy said it now expected output this year to be 7 per cent lower than planned while the cost of carrying out repairs at Torness and Heysham would be up to £25m.

At one stage yesterday British Energy shares fell by almost a half although they later recovered slightly to close at 63p, down 26.75p. The company was floated in 1996 for 105p and at its peak was valued at £4.6bn. It is now worth less than a tenth of that.

Analysts are already fearful that the dividend may be at risk after a slump in electricity prices which has left British Energy unable to make profits from the UK market.

Last year it plunged to a bottom-line loss of £493m after heavy write-downs in the value of its Eggborough coal-fired station and a handful of electricity trading contracts.

Robin Jeffrey, British Energy's executive chairman, has been pressing the Government to sanction a new generation of 10 nuclear stations to replace the country's ageing nuclear reactors. But first it wants £3bn of historic liabilities for decommissioning and cleaning up its stations to be passed to the taxpayer.

More immediately, British Energy has also been seeking a £25m a year reduction in its rates bill and exemption from the Climate Change Levy to help restore its UK profitability. Last year it lost £41m in the UK before one-off items.