The possibility of the plug being pulled has loomed ever larger at the nuclear energy generator. One can very easily visualise the men in grey queuing up outside the head office in East Kilbride to be appointed as administrators to the company.
But there’s one money man who will be hoping the corporate undertakers will be kept at bay. Step forward Keith Lough, British Energy’s finance director, a man who has been in the financial hotseat for just over a year.
Lough (as in ‘how Lough can the share price go?’ one observer quipped) came to the struggling company last September from Hurricane Hydrocarbons, the Kazakhstan oil exploration and refinery company.
An energy man through and through, Lough also did time at Lasmo, another oil exploration company that was subject to a takeover bid from the Italian energy company Eni in 2000, and British Gas.
But dealing with the Kazakhstanis will be nothing compared with the pressure Lough now faces, as he and his executive chairman, Robin Jeffery, battle to keep the turbines turning.
Part of Lough’s tactics has been to argue that the company could charge higher prices if its business customers were not required to pay a climate change levy – this adds more than £4 a megawatt-hour to each bill.
If the businesses were not required to pay the levy, British Energy would be able to charge more, but the businesses themselves would still pay less.
This would allow the generator to cover its costs of production, which at £19.46 a megawatt-hour is more than it can currently charge its customers.British Energy argues that its electricity should be exempt from the levy as it does not produce carbon dioxide.
Such a move would save £100m a year.
But it appears that the Department of Trade & Industry may have lent the company the money, but is not lending a sympathetic ear.
Negotiations continue, but the DTI is refusing to rule out administration – the company might emerge from the other side of such a procedure, but whether its management team remains only time will tell.
British Energy said no-one, including Lough, was available for an interview – restructuring the finance is taking up all his energy.
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