The Government received a good price when selling its interest in British Energy. But it is too early to say whether the sale will enable the Government to achieve its strategic objective of ensuring nuclear operators are able to build and operate new nuclear power stations from the earliest possible date and with no public subsidy, according to a report by the National Audit Office.
British Energy was the largest independent energy generator in the UK and owner of sites viewed by industry as the most suitable for new nuclear power stations. The Government sold its 36 per cent interest in the company to EDF Energy for £4.4 billion in January 2009. The final cash offer from EDF was 774 pence per share – 10 per cent higher than the valuation by the Shareholder Executive, the Government agency that managed the sale. Movement in energy prices after completion of the sale show that EDF put forward its offer when energy prices were at a peak.
The Government’s primary objective for the sale was to ensure nuclear operators are able to build and operate new nuclear stations from the earliest date with no public subsidy. The Department of Energy and Climate Change did not seek, and EDF did not offer, any binding commitment to build new nuclear power stations as a condition of the sale. But EDF’s acquisition of British Energy has improved the prospect of investment in new nuclear power stations.
While the Government no longer has a direct financial interest in British Energy, it remains responsible for funding any shortfall in the future cost of decommissioning British Energy’s existing nuclear power stations. The Shareholder Executive did not carry out a formal assessment of the impact of the sale on the risks that taxpayers might have to bear if, for example, the new owner operated British Energy’s power stations in a way that required earlier decommissioning.