British Energy's 60 per cent plunge in profits offers a vivid illustration of why the UK urgently needs a new set of reactors.

With wholesale power prices close to record highs, British Energy should be enjoying a windfall this year. Instead, its clapped- out fleet of power stations has been operating well below capacity because of a string of technical problems. Electricity output has fallen sharply while operating costs have soared.

While British Energy insists that this is merely a temporary problem, arguing that once repairs to its reactors at Hartlepool and Heysham are completed, normal service will be resumed, the reality is likely to be somewhat different.

Only one of British Energy's eight nuclear power stations, Sizewell B, is in good order and will still be operating much after 2020.

The rest, like old cars, are likely to be increasingly unreliable and require increasing amounts of investment as they approach retirement.

These latest results are unlikely to make a widely expected takeover of British Energy — a necessary step to breathe new life into the industry — much easier to achieve.

EDF, which remains in talks about a deal, knows that buying the company represents a big commercial opportunity to build new stations, but it is also acutely aware of the risks.

These results will make it tougher to persuade EDF's board to significantly raise its current offer of 765p per share — a step that is necessary to satisfy hardline British Energy shareholders

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