British Energy - More unplanned Power outages - Credit down rating - more UK energy security problems
The post of Friday, August 17, 2007 -British Energy Nuclear Fleet production down 17%, profits by 14% covered the BE Q1 2007/08 results ending 1st July - BE once produced some 20% of the UK base electricity output - the results showed an astonishing (unplanned) reduction of total output dropped 17% from 17TWh to 14TWh for the period.
Now we learn today that Standard & Poor's Ratings Services have placed its 'BB+' long-term corporate credit rating British Energy Group PLC and its subsidiary British Energy Holdings PLC (BEH) on CreditWatch with negative implications.
The 'BB' issue rating on BEH's GBP550 million senior unsecured bonds was also placed on CreditWatch with negative implications.
This results from the previous day's announcement of problems in a boiler closure unit at one of the two reactors at Hartlepool which led the company to take the precaution of shutting down the other reactor and another of its units at Heysham, south of Morecambe.
The problem found during a statutory outage at Hartlepool's first reactor relates to a wire winding. The discovery will delay the restart of the unit, which was originally scheduled for early November.
The second reactor at Heysham 1 is currently on a refuelling outage but its return to service will be delayed. British Energy said it was currently assessing when the units might return to service.
There are eight steel and concrete boiler closure units in each reactor. All are pre-stressed with nine layers of wire winding at the outer periphery. Hinkley Point B and Hunterston B returned to service in May but output is still being affected by load restrictions.
These windings are somewhat like alternate armature windings on an electric motor. They areactually massive steel ropes designed purely to contain any explosion - they only get really tested when things go very badly wrong. Engineers who worked on them originally faced enormous problems, as the 3 dimensional geometry whilst ideal in purpose, presented huge problems is construction and they were subject to massive forces to get them in place.
The concern expressed and the rapid closure of Heysham suggests that there could be a major problem and prolonged outages... another consequence of the rash of one off designs used in the 60's designed reactors.
The shares dropped 40p on the news and trade at 540p off 2 year highs of 700p.
Do not discount a merger with DRAX. (lse DRX) whose shares have risen from 610 when this news was announced to nearly 650p. Drax, as the next largest UK electricity supplier will benefit as electricity wholesale prices rise resulting from BE's shortage of output and their need to buy in onthe market to meet sales contract requirments.
This is not good news for any plans the Gubment have for reintroducing nuclear power as part of the UK power mix ... another consequence of their delay and procrastination.