British Energy shares slumped 8 per cent today as the UK's largest electricity generator confirmed that two of its nuclear reactors would remain shut for the foreseeable future.

The plants were closed last month when the company discovered a corroded steel wire in the concrete casing of one of two reactors at its Hartlepool power station, which supplies up to 1.5 million homes with electricity.

The nuclear power specialist said yesterday that it had discovered a similar problem at its Heysham 1 reactor, confirming fears that the problem was not an isolated one and would require further inspections, remedial work and many more months of closures to fix.

News that British Energy’s reactors are unlikely to be back on line quickly is likely to put pressure on gas prices, as the UK will have to import more gas to meet winter peak demand.

The company, which reports half year results next week, was unable to say how long the inspections would take but analysts have concluded that the affected plants are likely to be shut down until March at the earliest. Its shares fell to 510.5p, slightly ahead of the 500p low they hit last month.

“Assuming both stations (Heysham and Hartlepool) are off for the remainder of the financial year, we would expect the loss of around 8 TWh of output,” analysts at UBS wrote in a research note.

“The outages are likely to result in increased market share for gas generators and may have a small positive impact on power prices due to tighter margins,” they added. Shares in Drax, operator of Britain’s biggest coal-fired power station, are up over 4.4 per cent.

This will mean that the units are closed throughout the entire winter peak period and will reduce British Energy’s total output for the year by at least 5 terra watt hours.

In a statement, British Energy called the problems a “legacy issue” which had been discovered during a routine inspection.

“We are in the process of developing the methodology to secure the return to service of the units. This is a complex issue and a timetable for the return to service of these units can only be formed when inspections and a full assessment of the situation have been completed,” the company said.

It added that it would provide a description of the issue and how it was being addressed as part of its results presentation next week.

British Energy has been dogged by a series of prolonged power plant outages over the past year, following years of under-investment in the nuclear plants.

Together, Hartlepool and Heysham-1 generate about 17 terawatt hours of electricity a year - 25 per cent of British Energy’s total output. The company accounts for nearly a fifth of the UK’s electricity supply.

This winter’s problems are a grim echo of last year’s discovery of cracks in the boiler tubes at its Hinkley Point B and Hunterston B power stations. These plants are still only perating at only 60 per cent capacity and the group’s recent first quarter profits were down 40 per cent on a year ago.

Bill Coley, British Energy’s chief executive, has been desperate to draw a line under the operating problems at BE’s plants because he wants to position the company as the natural partner to help build a new fleet of nuclear power plants.

Analysts said it was not possible to blame the current management for the latest issues because it had not previously been possible to inspect those parts of the plant where the problems have arisen.

Industry figures said that despite tight supplies, there should be more than enough spare capacity across the UK to cope with winter peak demand.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive