INTERVIEW - UK must protect nuke industry, save BEnergy - expert
Date: 19-Sep-02
Country: UK
Author: Eva Sohlman
Dieter Helm, an economics professor at Oxford University, said nuclear power should be treated like renewable energy which is supported by government rules creating a guaranteed market for green power producers.
"For renewables the government imposed an obligation and so you must buy this power through long-term contracts...it would have to do the same for British Energy," Helm said in an interview with Reuters.
Last week the government stepped in with a 410 million-pound ($630.3 million) emergency loan to British Energy, the UK's largest electricity producer, which had warned it was facing insolvency because of low power prices.
The loan runs until September 27 and the government has yet to decide whether to continue funding the former state-owned company or send it into administration.
Analysts say break-even level for the company's nuclear power production is about 19 pounds per megawatt hour. UK spot prices have hovered around 16 pounds in the last two months.
"The problem is that what you've got is a large capital inflexible plant exposed to a spot market and nobody with the right mind would invest in a nuclear power station on the basis of spot prices," said Helm, who is also director for UK economics consultancy Oxera.
"What it (British Energy) needs is not to be exposed to spot prices," he said.
He said putting the firm into administration would not solve British Energy's problems long-term.
Echoing Britain's chief scientific adviser David King, Helm said the company should be exempt from the climate change levy, a tax on the business use of energy, as its generation does not produce any polluting carbon dioxide.
Electricity from renewable sources is exempt from the levy which adds 0.0043 pence a kilowatt hour to bills.
Analysts say an exemption could save British Energy up to 100 million pounds a year.
British Energy produces nearly a quarter of the country's electricity. The remaining nuclear power is generated by state-run British Nuclear Fuels which owns the country's oldest nuclear reactors.
