Falling UK Power Plants Threatens Ability For Generators To Pay Back Loans
Falling power prices in the UK are threatening the ability of the electricity generators to repay the loans that were taken out in the 1990s and may lead to losses among the nation's banks, said Britain's power regulator. “A lot of independent power producers will have to renegotiate their debt with their banks,” said Callum McCarthy, the chief executive of the UK regulator, Ofgem. His comments were earlier reported by the Financial Times newspaper and confirmed by Ofgem spokesman Mark Wiltsher. UK power generators are trying to reduce costs to offset a forty percent decline in the wholesale power price over the past four years, sparked by the introduction of a new trading system in March 2001. That may not be enough though, AES Corp.'s Fifoots Point power station in Wales went into receivership in March. The slump is reducing the value of assets owned by the generators. British Energy, which produces a fifth of the UK's power, said last week that it wrote off more than half a billion pounds ($730 million) worth of assets with its full year earnings.