British Energy closer to rescue

BRITISH Energy and British Nuclear Fuels have moved closer to resolving their dispute over the costly fuel reprocessing contracts that helped drive BE to the edge of insolvency.

The two agree that the cost of reprocessing could be linked to electricity prices, protecting BE from the recent sharp price fall. It is not clear how much BE would save on the £300m-a-year contract.

BE went cap in hand to the Government in September after it decided it could not cover its more than £1bn debt. Ministers have given BE a £650m lifeline while it seeks a plan to make up a £280m annual shortfall. A major stumbling block to renegotiating the fuel contracts will be winning the support of the Government, owner of BNFL. It will be reluctant to push any more losses on to the taxpayer.

Shares in BE, 294 1/2p a year ago, fell 0.8p to 10.7p. Many in the City believe any rescue plan will wipe out what little value is left.