LESS than a month ago British Energy cautioned that one of its reactors at Hunterston would remain out of action until January and that another at Hinkley was being closed down for inspection.

Now the full picture of British Energy’s problems is emerging and it is worse than the company had anticipated. Hunterston and Hinkley, which have boiler tube cracks, top a catalogue of faults and defects at seven of British Energy’s eight power stations.

The only good news is that there is no more bad news scheduled. But that doesn’t help British Energy’s current difficulties of a plunging share price, a need to buy energy on the open market to satisfy customers who have already bought energy contracts from it, costs likely to run into hundreds of millions of pounds and the possibility that the company may not be able to extend the lives of its reactors. Nor does it help the Government, which wants to sell down some of its British Energy stake.

Bill Coley, British Energy’s chief executive, said that the boiler tube cracks were a symptom of an ageing fleet of power stations. That diagnosis does not bode well for the rest of the boiler tubes, which could be protected by running them at lower temperatures. That, however, will reduce output, which the company can ill afford.

British Energy has been consistent with detailing its problems over the past few months and some analysts believe that its difficulties are, in part, historical and are being unearthed by a meticulous management team. They believe that the nuclear business was underinvested in the past and that shortcomings are now beginning to emerge.

Mark Hives, an analyst at Société Générale, said British Energy’s reactors were the type “that will continue to have this kind of problem”. He said: “I do not believe there is any way that British Energy will ever meet its target of an international level of outages for these reactors.”

He said those levels were usually associated with modern pressurised water reactors.

The current problems to hit British Energy come after the company had enjoyed a resurgence since its financial restructuring, which involved a government bailout, on the back of higher energy prices. Its difficulties are now pushing those prices higher, compounding its problem of having to buy energy in the open market to meet its contractual obligations.

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