June 4, 2003 By HEATHER TIMMONS LONDON, June 3 - British Energy, which owns eight nuclear power plants in Britain and part of the Three Mile Island plant in Pennsylvania, said today that it had drastically lowered its estimate of what its power plants were worth, leading to a loss of £4.3 billion ($7 billion) in the fiscal year ended March 31. The company, based in East Kilbride, Scotland, said it had written down the value of its British nuclear plants by £3.6 billion, or more than 80 percent, and that of a coal-fired plant in Eggborough, England, by £151 million. Excluding the write-downs, British Energy lost £130 million for the fiscal year, a reversal from a £42 million profit the year before. "The past year has been traumatic for British Energy and its stakeholders," said its chairman, Adrian Montague, in a statement today. A combination of high fixed costs at the nuclear plants, a decline in power prices, a number of power interruptions and a "bleak outlook" for future prices contributed to the loss, Mr. Montague said. As deregulation has divided Britain's electricity system into separate power producers and distributors in the last decade, the producers have suffered from overcapacity and low prices. Wholesale power prices have fallen some 40 percent since deregulation. British Energy grew so financially weak last fall that it needed a government bailout to avoid bankruptcy; the government agreed to pay £2 billion to help cover the company's nuclear-related liabilities. British Energy's stock has lost more than 95 percent of its value in the last year; it closed today at 4.35 pence in London. British Energy's future hinges on obtaining approval from the European Commission in Brussels for a restructuring plan that includes the £2 billion in aid from the British Department of Trade and Industry. Under the aid package's terms, a government-backed fund would cover any shortfalls in British Energy's ability to pay for the cost of decommissioning its nuclear power plants as their useful life ends; in return, British Energy would pay a portion of its future profits to the fund. The plan was submitted March 7, and a decision is expected within 12 months. Some analysts say that the plan is certain to win approval, so that with last year's losses behind it, British Energy should have smooth sailing ahead. "It is going to be a viable company," said Iain Turner, an energy analyst at Deutsche Bank. Others disagree that approval of the plan is a sure thing. It is opposed by an unusual coalition of environmentalists, nonnuclear energy producers and companies that make electricity from renewable sources like sunlight and wind. The three groups oppose the plan on the ground that it favors British Energy and its nuclear plants over rivals. The AES Corporation of Arlington, Va., which owns Drax, the largest coal-fired power plant in Britain, petitioned the European Commission to reject the plan because it would artificially depress power prices. Greenpeace and Ecotricity, a British wind and solar energy company, protested that the plan would leave no room in the market for alternative energy sources. "British Energy's position has never looked more bleak," Greenpeace said today in a statement. Under an earlier restructuring plan, British Energy was to sell off its half-interest in AmerGen, a joint venture with the Exelon Corporation of Chicago, by June 30 of this year. AmerGen owns Three Mile Island and the Oyster Creek nuclear power plant in Waretown, N.J. Antinuclear activists in New Jersey are campaigning to shut down Oyster Creek by 2009 because of the threat of terrorism and the large number of people who live near it. British Energy said in March that it had yet to receive a suitable offer for its stake in AmerGen. Company executives told analysts today on a conference call that British Energy was in talks with several companies about AmerGen, but did not give specifics. In April, British Energy, which supplies electricity to one out of every six homes in Britain, paid off a £650 million government loan using the proceeds from its sale of a Canadian subsidiary last year, according to Bloomberg News. Copyright 2003 The New York Times Company