Loose connections

4 August 2008 By Mike Prest

The collapse of the deal between EDF and British Energy is a symptom of a deeper malaise. UK energy policy is becoming increasingly dysfunctional. That s primarily because the country has drifted into a publicprivate entanglement which hampers longterm policy making.

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The board of British Energy, which owns most of the UK's nuclear power stations, last week rejected a bid from EDF, the French governmentcontrolled utility. A small number of British Energy shareholders believed that the bid, which valued British Energy at about £12bn, was too low.

The UK government hoped that a takeover of British Energy by EDF would revitalise the country's nuclear power programme. The government is entitled to 35% of British Energy's net cash flow, which coverts into a 35% equity holding if a bid crystalises.

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