Oct. 10 (Bloomberg) -- British Energy Group Plc, the nuclear utility being bought by Electricite de France SA for 12.5 billion pounds ($21.1 billion), said repair work on two reactors is behind schedule and costs will be higher than expected.

The U.K.'s biggest power producer said two of the four reactors at its Hartlepool and Heysham 1 plants, already closed for about a year because of corroded wires, probably won't start until 2009 instead of this quarter. The delays were announced after work on Heysham 1 Unit 1 took longer than planned.

British Energy's earnings and production have been hurt the past two years by unscheduled shutdowns at its atomic power stations. As an alternative to EDF's 774 pence a share offer, British Energy shareholders can opt to take 700 pence plus Contingent Value Rights, which give them a slice of profits from the existing U.K. nuclear power plants during the next 10 years.

Vincent de Rivaz, the head of EDF's U.K. unit, said Sept. 24 the company ``adopted a very conservative hypothesis for the future functioning of the reactors.'' British Energy also gave an update on prolonged halts at some of its other plants in today's statement.

The East Kilbride, Scotland-based company said its Dungeness B reactor 1 is ``in the process of being returned to service following its planned refueling and maintenance.'' Dungeness B Unit 2 will probably start in December following refueling. Hinkley Point B reactor 4, offline for a boiler inspection outage, will also start in December.

Reduced Capacity

Extended maintenance at coal-fired and nuclear stations this year reduced available power generation capacity, meaning costlier reserve generation was used to satisfy demand. November power contracts traded at more than 150 pounds a megawatt hour this week, the highest ever for a monthly contract, on forecasts for a reduced power surplus that month.

British Energy said it will postpone maintenance at a unit of the coal-fired Eggborough power station, originally planned for November, until the first quarter. It also plans to start the Heysham 2 reactor 7 next month.

The cost of repairing the corroded wires at Heysham 1 and Hartlepool will be ``marginally higher'' than the previous estimate of 115 million pounds, British Energy said. It has conducted additional maintenance while the units have been offline, including replacing parts and pipes. It still plans to start at least two of the four reactors at the stations this year, according to today's statement.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: October 10, 2008 04:23 EDT