ABSTRACT
By 1999 British Energy, having travelled hopefully, had arrived. The company had raised profits, returned cash to shareholders and was executing a credible investment strategy in North America while building a vertically integrated business in the UK. But there was one thing outside management’s control which would ultimately wreck their reputations and consume the great majority of shareholders’ money: the price of power. At privatisation, the chief executive and finance director had endlessly pointed out to prospective shareholders how vulnerable the company was to price weakness. But in the three years since privatisation the wholesale price of power had stayed flat (in nominal terms), and investors seemed to have forgotten about the risks. But a long running war between the regulator and the electricity generating duopoly was about to enter a new phase with British Energy the main casualty.
