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Privatisation

In its 1988 White Paper "Privatising Electricity" the previous Government announced its intention to privatise the electricity supply industry. However, it was recognised that the overall cost of electricity from existing nuclear power stations was more expensive than electricity generated from new coal, oil or gas fired stations - largely due to the high capital costs of nuclear power stations coupled with the costs of the decommissioning of nuclear installations and the disposal of nuclear wastes. For these reasons, plus uncertainties over the costs connected with the financing of new Pressurised Water Reactor (PWR) stations (at that time three other PWR stations - Hinkley Point C at Somerset, Wylfa B in Anglesey and Sizewell C in Suffolk - were planned in addition to Sizewell B) and concerns about the operating performance of the Advanced Gas-cooled Reactor (AGR) stations, nuclear power was removed from the Government's privatisation plans.

In 1994 the previous Government's "Review of the Future Prospects for Nuclear Power in the UK" examined the economic and commercial viability of new nuclear power stations in the UK. The review confirmed the then Government's support for the continued operation of existing nuclear power stations provided they were able to maintain rigorous standards of safety and environmental protection. It acknowledged that nuclear power contributed to diversity of supply and to protection of the environment - i.e. nuclear power stations emit practically no sulphur dioxide or nitrogen oxides (the principal ingredients of acid rain) and virtually no carbon dioxide (the principle gas responsible for global warming). It also took the view that providing public sector support for a new nuclear power station would constitute a significant intervention in the electricity market and that circumstances did not warrant such an intervention.

The 1994 review also concluded that moving as much of the nuclear generating industry, with its associated liabilities, as is practicable into the private sector would bring benefits for the industry, electricity consumers and the taxpayer. Following the review, the nuclear generating industry was therefore reorganised to enable its more modern stations, the seven AGRs and Sizewell B, with their associated liabilities to be transferred to the private sector. British Energy was privatised in July 1996 (see below for latest position). British Energy is the holding company with a subsidiary - British Energy Generation Ltd - operating the PWR and five AGR stations previously run by Nuclear Electric Ltd, and the two AGR stations in Scotland previously run by Scottish Nuclear Ltd.

The older plant, two operating Magnox stations and the closed Magnox stations, and the associated liabilities remain in the public sector. Initially these stations were the responsibility of a stand-alone company, Magnox Electric plc. However, this was integrated with British Nuclear Fuels plc (BNFL), the UK's Government-owned supplier of reprocessing and other nuclear fuel cycle services which already operated two Magnox stations (Calder Hall and Chapelcross) in March 1998.
With effect from 1st April 2005 the Nuclear Decommissioning Authority (NDA), an executive non-departmental public body sponsored by BERR, became owners of the plant and facilities of BNFL, including the Magnox stations. The NDA’s core mission is decommissioning and clean-up, but it is also required to operate existing commercial activities and to use the revenues to offset expenditure on decommissioning. The Magnox sites are operated my Magnox electric under contract to the NDA. In due course the NDA will put the management contracts out to competition.