Countdown to blackout

The 24-hour strike threatened by 4,500 British Energy engineers and technicians this week would cost the company up to £100m and almost certainly lead to power cuts.

The 24-hour strike threatened by 4,500 British Energy engineers and technicians this week would cost the company up to £100m and almost certainly lead to power cuts, industry sources warned.

Following an overwhelming vote in favour of industrial action, the five unions involved have told the company that the stoppage – which will shut down all eight of its nuclear plants – will go ahead on 29 November unless it comes up with an acceptable pay offer in the interim.

A BE spokesman confirmed that the loss of its own generation would force the company to buy around 7,000MW of capacity from other sources to honour its supply contracts. ‘We would have to buy the power to meet the commitments,’ he said, conceding that the cost of doing so would ‘probably’ be punitive.

The head of electricity trading at one of the UK’s other leading power groups said BE would have to buy up all available capacity, including 3,000MW of oil-fired generation that was currently bid into the balancing market at a price of £200 a megawatt hour.

Counting the cost

As this would doubtless set the price for other sellers, he said BE would face a bill of around £33m for the day. However, he pointed out that as the company would have to shut down the nuclear plants the day before the strike and take another day to bring them back on line the bill ‘could be treble that’.

This huge financial threat to the company comes in the week that it reported a £15m loss for the six months to September, and executive chairman Robin Jeffrey told City analysts that he expected further cost reductions and output improvements to help in the second half of the year.

Senior industry sources say the loss of BE’s baseload nuclear plants would also create a serious risk of blackouts, because while there is notionally sufficient reserve capacity to fill the gap, much of it was seldom used and of dubious reliability. ‘I don’t know if there’s enough spare plant that could run for 24 hours, ‘ said one.

A British Energy spokesman agreed that power cuts were a real risk if the seven currently operating nuclear plants – one is on a planned outage – were forced to close. ‘If you lost the lot, potentially there would be power shortages,’ he said.

The threat of disruption mounted at the beginning of the week when the five unions – AAEU, GMB, Prospect (the new entity born of the merger of the IPMS and EMA white-collar unions), Unison and the T&G – announced the result of a postal ballot on whether to take industrial action over the company’s pay offer for the next two years.

The workforce voted 15-1 in favour of action short of a stoppage and 5-1 in favour of strike action, with little difference in the margin among the unions.

The unanimity of the result on a high return (70-80%) surprised even the union officials, who said it was a clear indication of the extent of staff disillusionment.’What has happened here is that they have lost complete confidence in the management team that is heading the company,’ said Dougie Rooney, the AEEU’s national officer for the energy and utilities sectors.

The unions will formally notify the company today of the programme of action, which will start with an overtime ban and work-to-rule on 19 November and escalate to the 24-hour strike if no accommodation is reached in the meantime. Rooney said even the initial action would probably force the company to close down some capacity, given current staffing shortages.

Both sides have accepted an offer from Acas to mediate in the dispute and agreed that no action will be taken that compromises the safety of the plants. Rooney said this could well involve providing emergency staffing during any shutdown.

No common ground

BE has offered the workforce a two-year deal, which provides a 2.175% basic annual pay rise with a further performance-related increase in the second year that could take the total to 3.5%.

However, this is contingent on the company meeting higher output targets for the nuclear plants.

‘We’re totally opposed to that,’ said Rooney. ‘The performance targets are based on the output of the stations, and we have no control over something going wrong that stops the station from running,’ he added.

The unions are asking for a one-year deal ‘with no strings attached’ that reflects what they see as the going-rate for pay increases in the power sector – somewhere between 3% and 3.9% based on settlements agreed at rival companies such as Magnox Electric, Scottish Power and Scottish & Southern.

With the cost of meeting the unions’ demands likely to total no more than £3m, there would seem to be a powerful case for the management to negotiate. ‘There’s strong pressure to settle, I suspect,’ said the trading chief at the rival company.