Risk Management

British Energy is the UK's largest electricity generator, with a stock of eight nuclear power stations and an annual turnover of over [pound]2 billion. With privatisation in 1996, the Government raised [pound]2.1 billion from the sale, and the company assumed responsibility for all its nuclear liabilities (including the disposal of spent nuclear fuels and decommissioning of power stations). When, in September 2002, the company declared difficulties in meeting these liabilities, the Government (given its overall responsibility for safe nuclear management) granted a [pound]410 million credit to stabilise the company's trading position. A formal restructuring deal was announced in October 2003, which has meant that the DTI is ultimately exposed to British Energy's remaining [pound]3.9 billion liabilities. Following on from previous reports on the topic (produced by the Committee (HCP 242, session 1998-99; ISBN 0102122997) in February 1999 and the NAO (HCP 264, session 2003-04; ISBN 0102927138) in February 2004), this report examines the extent to which risks originally transferred have been accepted back, as well as the DTI's monitoring of British Energy's viability.
Findings include that the Government failed to establish proper risk management arrangements and lacked proper information on the company's deteriorating financial position.