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UK Nuclear Chief Warns of Power Supply Crunch

Britain must keep its ageing nuclear power stations running as long as possible if it is to avoid a damaging shortage of power in five to seven years' time, British Energy Chief Executive Bill Coley said on Thursday.

Posted: Friday, September 14, 2007, 10:36 (BST)
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Germany's E.ON AG and RWE AG, France's EDF and Britain's Centrica Plc and Scottish and Southern Energy Plc have all previously confirmed an interest in playing a role.

"There are others who are not now in the UK who have also expressed an interest," said Coley.

Britain's electricity network might struggle to handle new 1.6 gigawatt reactors, limiting any new nuclear stations to around 1.3 gigawatts, he added.

Such a plant would cost 1.6 billion pounds to 1.7 billion at current market prices.

"I would think it would be hard to support the construction of more than two at any one time, partly due to workforce constraints," said Coley.

A new generation of nuclear power stations could not be operational before 2016, but a decline in Britain's North Sea gas reserves and power generating capacity alongside continued economic growth could lead to a supply crunch in five to seven years time, he added.

That combined with strong international competition for liquefied gas imports, particularly from the United States, India and China, should support power prices in the future.

"We may see more volatility in short-term prices and generally an uplift in long-term prices," he said."I don't see them returning to the very low levels of 2002."

Falling power prices in 2002, to below 20 pounds per megawatt hour, took British Energy to the brink of collapse, forcing a financial restructuring.

British Energy has suffered minor teething problems with Hunterston and Hinkley since they were shut down last autumn to repair boiler cracks, and the issue has overshadowed significant improvements in the performance of its six other nuclear plants.

"We've seen the precursors of improvements coming through," said Coley when asked whether the change was due to luck or judgement. "I've been pleased with their performance, but we're not across the goal line yet."



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