British Energy has reported a 66 per cent fall in profits over the first quarter despite an increase in power prices as its nuclear power stations reach the end of their life.

Pre-tax profit at the energy company fell from £296 million to £101 million over the three months to June 29th, compared to the same period last year.

The drop in profits was down to a fall in output, with nuclear stations producing 9.5TWh compared to 13.0TWh for the first quarter of 2007.

Maintenance work at the Hartlepool and Heysham 1 reactors meant these plants were out of service during the period, while ageing instrumentation meant efficiency has been hit across British Energy’s eight nuclear stations.

Bill Coley, chief executive of British Energy, said: “We have continued to make good progress towards resolving the plant issues that have significantly impacted our performance in the year to date.”

However, the company admitted it would cost more than was thought to bring the units back on line – £115 million, up from the previous £50 million estimation.

Coal and uranium prices have also risen significantly over the past few months, making the production of electricity more expensive.

However, the rise in electricity wholesale prices – from £60/MWh at the start of April 2008 to £88/MWh as at 29 June 2008 – has helped offset these costs, British Energy said.

The fleet of nuclear reactors will need to be replaced with a new generation soon, and the government is keen to sell its 36 per cent stake in British Energy to a private company who will invest in nuclear energy.

Several firms have been named as potential suitors for a takeover, with EDF thought to have made a bid, which was initially rejected.

“Advanced discussions continue in connection with a potential offer for the company,” British Energy said in a statement.