MORE than 5,000 power workers were left fearing for their futures last night after British Energy announced losses of £4.3bn in the past year.

The troubled energy generator was forced to slash £3.6bn off the value of its eight UK plants and warned it could yet fall into insolvency.

It also shaved £151m off the value of its coal-fired station at Eggborough, near Selby, in North Yorkshire.

British Energy (BE) maintains a vision statement of becoming "the world's leading nuclear energy company", but has been forced to admit it is fighting for its life.

The power company is the largest generator of electricity in the UK, supplying energy to industrial and commercial clients. It is responsible for 20 per cent of the country's electricity.

The Government has taken steps to underpin the flagging firm with £650m grant aid last year when the company was on the brink of bankruptcy.

BE repaid the debt but was forced to accept another advance of £200m to September next year while it searches for a long-term future.

The European Commission has yet to decide if the aid is in breach of competition rules.

Among eight plants, BE operates Hartlepool Power Station, and had plans for a second generator but was forced to shelve the move.

A spokesman told The Northern Echo: "There is nothing planned at the moment on new-build.

"The Government recently issued a paper on the future of the energy industry and set a moratorium on new nuclear energy plants."

BE's problems lie in the high fixed cost of producing nuclear energy, coupled with a steep decline in wholesale electricity prices.

The company is hoping to persuade shareholders and bondholders to swallow a bitter financial pill for the sake of its long-term future.

Creditors will be asked to swap £1.3bn of debt for new British Energy shares and bonds.

The restructuring will leave the company largely in the hands of its creditors, with existing shareholders left with less than five per cent of the business.

BE is looking to make further cost savings of £25m a year in 2003/2004 and 2004/2005 and has not ruled out further job cuts.

Chairman Adrian Montague said: "Significant progress has been made in the pursuit of the plan, although much work still remains to be done to secure a successful restructuring."

In a statement, the company warned that if it was unable to implement the restructuring, it may be unable to meet its financial obligations and may have to take appropriate insolvency proceedings.

Besides the power plant write-downs from £4.4bn to £800m, BE took one-off charges for restructuring costs, the sale of its Bruce Power business in Canada, and decommissioning funds for nuclear plants.

In total, exceptional costs this year were £4.2bn.

This year's losses compare with losses of £493m in 2002. Excluding the write-downs, the firm lost £130m this time, compared with a profit of £42m a year ago.