Other Free Encyclopedias » Company History » Electricity & Utilities

British Energy Plc Business Information, Profile, and History

power nuclear company government

3 Redwood Crescent
East Kilbride
Strathclyde G74 5PR
United Kingdom

Company Perspectives:

British Energy's vision statement is "to be the world's leading nuclear energy company."

History of British Energy Plc

British Energy Plc, in addition to being the United Kingdom's largest power generator (by producing more than 20 percent of the country's power supply through a network of eight nuclear power stations and several non-nuclear stations), is also a fast-growing energy producer in the North American market. Through AmerGen, its 50 percent joint venture with Exelon (formerly PECO and Unicom), the company owns three U.S. nuclear plants, including Three Mile Island's Unit I (which, unlike sister Unit II, has never posed a direct public health risk). AmerGen's other U.S. holdings include Clinton Power Station in Illinois and Oyster Creek in New Jersey. These stations add nearly 2,500 megawatts (MW) capacity to the company's 9,600 MW in the United Kingdom. The company also holds a purchase agreement for the Vermont Yankee station, which is pending government approval. Meanwhile, British Energy also has expanded strongly into Canada, where it controls an 82 percent share of Bruce Power. That company has signed a 17-year lease with Ontario Power Generation for the operation of up to eight "Candu" (Canada Deuterium Uranium) reactors in southwestern Ontario. Four of those reactors are already operational, totaling 6,200 MW in capacity; the company expects to bring two more reactors online by 2003. British Energy also has been taking steps to diversify beyond nuclear power. The company owns a coal-fired power plant in Yorkshire. On a more progressive front, British Energy has been investing in renewable power sources, particularly wind farms. The company has formed the Huron Wind 50-50 joint venture with Ontario Power Generation, and it expects to launch a wind farm, of yet undetermined capacity, on Lake Huron in 2002. In the United Kingdom, British Energy has partnered with Amec for a planned 600 MW wind farm in the Hebrides Islands off of the west coast of Scotland. These moves have come in response to new British government legislation barring new nuclear plant development while raising the percentage of renewable energy to 20 percent of the country's total power supply. British Energy, privatized in 1996, trades on the London and New York stock exchanges.

Inheriting the United Kingdom's Nuclear Power Industry in the 1980s

Electrical power generation and supply in the United Kingdom remained a sporadic and mostly local and regional concern until the 1920s, when the British government began to take steps to ensure the distribution of electrical power throughout the country. In 1926, the government formed the Central Electricity Board, which in turn began building a national power grid system linking up the various power stations already in operation. The existence of the grid, which meant that electrical power could be transmitted all over the country, encouraged the creation of an extensive network of privately held power stations.

By the middle of the 1940s, the United Kingdom counted more than 600 power stations. Yet voltages and pricing varied widely from one place to another, while many of the country's more remote locations continued to lack electricity. In 1947, the British government set up new regulations governing the power generation industry. A government-owned coordinating board was created with the mission to bring the power generation industry under control, ensuring complete national coverage, while standardizing voltages and pricing. At the same time, a network of regional electricity boards was created to act as retailers for the nation's power output. These boards took responsibility for converting energy for end-consumer use.

By the 1950s, the United Kingdom was caught up in a wave of nationalization efforts that saw the government take control of many of its most essential industries. The electrical power industry was nationalized in its turn in 1957, when the newly established Central Electricity Generating Board took over responsibility for the nation's power generation and transmission. At that time, the United Kingdom was inaugurating its own nuclear power industry, with the first British prototype nuclear plant going online in 1956. Located at Calder Hall, it was also the first plant in the world to provide electricity for the commercial market.

Nuclear power in the United Kingdom was almost doomed from the start. In 1957, fire broke out at the nuclear plant at Windscale (later known as Sellafield), which produced plutonium for nuclear weapons, leaking radioactive waste in what was the world's worst civil nuclear disaster at the time. Nonetheless, the British government pushed ahead with its nuclear power project. Following the successful launch of the Calder Hall plant, the government built two more prototype plants before beginning the construction of full-scale power plants. By the mid-1960s, the United Kingdom featured nine full-scale plants, in addition to the three prototypes, all of the Magnox gas-cooled reactor type.

By the mid-1960s, the British government had decided to switch to newer Advanced Gas-Cooled Reactor (AGR) technology for its next series of reactors, constructing five power stations in England and two more in Scotland. The first of these plants began operations in 1976, and the last was brought online in 1988. In the late 1970s, however, the government began exploring the next generation of nuclear power types, and in 1978 the government adopted the Pressurized Water Reactor (PWR) model, which had by then become the most widely used reactor type in the world. Yet England was to see the construction of only one PWR plant, the Sizewell B in Suffolk, which finally began construction after nearly ten years of public debate. Three more PWR plants were also in the planning stages. In the meantime, the infamous accident at the Three Mile Island nuclear power plant in 1979 and the more devastating disaster at Chernobyl in 1986 had cooled public enthusiasm for nuclear power. The Sizewell project went through, however, and at last was commissioned in 1995.

Privatized Nuclear Power Company in the 1990s

In the late 1980s, the British government, led by Margaret Thatcher, sought to extend its privatization drive begun earlier in the decade to the nation's electrical power industry. A government White Paper released in 1988 led to the Electricity Act of 1989, which broke up the Central Electricity Generating Board into four companies, including Nuclear Electric. This company, however, remained controlled by the British government, following the 1988 White Paper's recommendation. At that time, the nuclear power industry was considered too expensive--at least in comparison with its fossil fuel-based rivals--to be spun off as a private concern. In addition, the government was still pursuing plans to construct the three additional PWR-based power stations.

These power stations were put permanently on hold in 1994, as the British government enacted legislation barring development of any new nuclear power plants for the foreseeable future, although the proposed PWR stations remained on the drawing board. Nonetheless, the government remained committed to nuclear power as a diversified--and virtually emissions-free--source of power, which by then had come to represent more than 25 percent of the country's total power supply. As part of the 1994 legislation, the government began making plans to privatize Nuclear Electric, marking the end of the country's long privatization effort.

The privatization began to take shape by mid-1995, as plans were revealed to split up Nuclear Electric into two bodies, the first controlling the country's older Magnox-based reactors, which were deemed too old and too close to decommissioning--an expensive, lengthy process--to be placed in the private sector. The second company was to be named British Energy, which in turn was to serve as a holding company for two subsidiary operations, Nuclear Electric, which took over nuclear power operations in England and Wales, and Scotland Nuclear, which took over the nuclear power plants in Scotland. By the end of 1995, the as yet unofficial British Energy had already canceled plans to build two of the proposed new PWR stations.

British Energy's privatization nearly derailed before it was even formalized, however. By the beginning of 1996, British Energy had begun insisting that the British government shoulder part of the hefty decommissioning burden that British Energy was expected to pay--as part of the privatization, British Energy pledged to contribute to a long-term fund to provide for future plant decommissioning costs (decommissioning a nuclear power plant was a process that stretched over 100 years). In March, the company revealed that it had been losing between £50 million and £550 million per year during the previous five years. This revelation sparked the British government to put up £230 million toward British Energy's decommissioning fund, as well as slash its debt back to £700 million from £1.5 billion. These moves did indeed put the privatization back on track; yet, when the newly privatized company finally launched its IPO, it found itself valued at far less than had been originally hoped.

International Power Generator in the 21st Century

British Energy's first move was to begin to plot a diversification of its operations. For this, the company looked in two directions: the first, taking the company into power generation from non-nuclear fuel sources; the second was to take the company overseas. At the end of 1996, the company announced, but then abandoned, plans to build a gas-fired power plant near Lancaster. Instead, British Energy bought a 12.5 percent stake in Humber Power, an operator of a gas-fired power plant in South Humber (British Energy sold these shares in 2001). The company also entered an agreement with Southern Electric to build a series of small gas-fired power plants.

Meanwhile, British Energy had been holding talks with Philadelphia-based PECO, which resulted in the creation of the 50-50 joint venture AmerGen Energy. This new company had as its mission to acquire and operate nuclear power plants in the United States, where deregulation, and the eagerness of utility companies to shed their plants, opened a series of affordable acquisition targets. By the end of 1998, the company had identified some 100 nuclear power plants in the United States as possible acquisition targets. At that time, the company streamlined its structure, fusing Nuclear Electric and Scottish Nuclear into a single subsidiary, British Energy Generation.

AmerGen made headlines in 1998 when it became the first company to purchase a nuclear power plant. In October 1998, the company reached an agreement to pay $100 million to acquire the now infamous Three Mile Island plant. At that time, British Energy announced a goal of matching its U.K. generating capacity of 9,600 MW in the United States. The Three Mile Island acquisition was completed at the end of 1999. At the same time, AmerGen announced its acquisition of two more nuclear plants, at Clinton, Illinois, for US $20 million, and at Oyster Beach, New Jersey, for US $10 million. Meanwhile, the joint venture also was negotiating an agreement to purchase the Vermont Yankee power plant.

By then, British Energy was attempting to extend into the power distribution field, paying £105 million to acquire Hyder's South Wales Electricity (SWALEC) retail energy supply division in 1999. That attempt, which included a failed bid to acquire London Electricity, was swiftly abandoned, however, and in 2000 the company sold off SWALEC for £210 million.

Unable to build new nuclear plants in the United Kingdom, British Energy nonetheless had begun a drive to extend the lives of a number of its existing plants. In July 2000, the company succeeded in gaining ten-year extensions on two of its plants, in Torness and Heysham. By then, British Energy had stepped up its efforts to diversify its fuel sources, including the £640 million purchase of the coal-fired Eggborough power station in 1999.

Throughout this time, British Energy had been negotiating with Ontario Power Generation, which was under orders to reduce its grip on the province's power supply to 35 percent, to lease its Bruce Power nuclear facilities at Lake Huron. That agreement was signed in 2001, giving British Energy an additional eight nuclear plants--four of which were operational--with 6,200 MW of generating capacity, for a price of £1 billion. The company announced its intention to bring the four shuttered Bruce reactors back online, with the first two expected to be operational in 2002.

As the British government began a new energy review in 2001, British Energy announced its interest in constructing a new nuclear power plant in Hunterston, while urging the government to commit some £10 billion to the nation's nuclear power program--or see the company target the overseas markets for its future investments. Yet British Energy continued to hedge its bet, seeking a further diversification into alternative fuel sources. At the beginning of 2001, British Energy announced that it had formed a joint venture with Renewable Energy Systems to construct an offshore wind farm. This effort joined the company's construction of a 10 MW wind farm on Lake Huron, expected to be commissioned in 2002. At the end of 2001, however, British Energy pledged to step up the pace, announcing its agreement with Amec to build a 600 MW wind farm in the Hebrides Islands, off of Scotland, which, if completed, was to become the largest wind farm in Europe. In just a few years since its privatization, British Energy had successfully negotiated a diversification, becoming an international, multi-source power generation giant.

Principal Subsidiaries: AmerGen Energy LLC (U.S.A.; 50%); British Energy Generation Limited; British Energy Generation (U.K.) Limited; British Energy Power & Energy Trading Limited; British Energy (U.S.) Holdings Inc; Bruce Power LP (Canada; 85%); Eggborough Power Limited; Huron Wind (Canada; 50%); Lochside Insurance Limited; Offshore Wind Power Limited (50%); United Kingdom Nirex Limited (11%).

Principal Competitors: The AES Corporation; American Electric Power Company, Inc.; Canadian Utilities Limited; Duke Energy Corporation; Electricité de France; Exelon Corporation; International Power plc; PowerGen plc; PPL Corporation; Scottish and Southern Energy plc; Scottish Power plc; Southern Company; Tractebel s.a.; TXU Europe Group plc; Aquila, Inc.

Chronology

  • Key Dates:
  • 1956: The first British nuclear power plant is inaugurated, at Calder Hall, and becomes the first such plant in the world to provide electricity for the commercial market.
  • 1957: The Central Electricity Generation Board (CEGB) is created and takes over control of power generation in the United Kingdom.
  • 1964: CEGB begins planning next generation, AGR-based (Advanced Gas-Cooled Reactor-based) nuclear power plants.
  • 1976: Construction of the first AGR-based power plant is completed.
  • 1978: CEGB begins planning new generation of PWR-based (Pressurized Water Reactor-based) nuclear power plants.
  • 1988: A government White Paper recommends privatization of British electrical generation industry, except for nuclear power.
  • 1987: CEGB is broken up into four components, including Nuclear Electric, which groups nuclear power plants and remains government controlled.
  • 1994: The British government announces its intention to privatize Nuclear Electric.
  • 1995: British Energy is established as a holding company for Nuclear Electric and Scottish Nuclear.
  • 1996: British Energy, listed on the London and New York stock exchanges, is privatized.
  • 1997: British Energy forms AmerGen 50-50 joint venture with PECO (later Exelon) in order to acquire nuclear power plants in the United States.
  • 1998: Nuclear Electric and Scottish Nuclear are combined to form British Energy Generation.
  • 1999: AmerGen acquires Three Mile Island, Clinton, and Oyster Beach nuclear power plants in the United States; the company begins a diversification drive into non-nuclear-based power sources.
  • 2000: The company buys a coal-fired power plant in Yorkshire for £340 million.
  • 2001: The company acquires a 17-year lease for eight nuclear power plants at Bruce Power facilities in Lake Huron, Ontario; the company announces plans to build a 600 megawatt wind farm in a joint venture with Amec in the Hebrides Islands, off of Scotland.
British Nuclear Fuels Plc Business Information, Profile, and History [next] [back] Bonneville Power Administration Business Information, Profile, and History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or


This web site and associated pages are not associated with, endorsed by, or sponsored by British Energy Plc and has no official or unofficial affiliation with British Energy Plc.