 British Energy is now in a stronger position as energy prices rocket |
The cost of covering British Energy's nuclear liabilities has gone up by 50% in the last three years, according to the government's spending watchdog. The National Audit Office (NAO) says this has left UK taxpayers with a "significant risk" of a bill of �5bn.
It results from the government's bail-out of the nuclear power generator British Energy in 2002.
British Energy sells electricity to wholesale customers, but when prices collapsed the company nearly went bust.
According to the NAO, the government had no choice but to bail out the company, but it handled the move inefficiently.
 |  The scale of the liability to be borne by the public purse will depend crucially on British Energy's performance in future years |
Because energy prices have risen so sharply, the fund is healthy at the moment, but any sharp move in the market could change all that.
The NAO said the electricity market had proved to be "particularly volatile" over recent years.
"The scale of the liability to be borne by the public purse will depend crucially on British Energy's performance in future years," said Sir John Bourn, head of the NAO.
"It is therefore crucial that the Department [of Trade and Industry] keeps close scrutiny to ensure the taxpayer's position is safeguarded."
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