POWER generation group British Energy reported a £231m dive in full-year profits after facing problems in the UK energy market.

The group, which is based in East Kilbride, near Glasgow saw lower than expected nuclear output, and a fall in the price of electricity as pre-tax profits dropped to £10m.

During the year to March 31, the price of electricity fell by 15 per cent, driven by increased competition, and uncertainty within the industry because of the prospect of new trading arrangements.

Under the new arrangements, introduced in March, power generation groups can sell their electricity directly to businesses, rather than selling it to a central pool operated by the National Grid.

Its nuclear output, while slightly ahead of the previous year, was lower than expected due to restrictions at its Torness plant, East Lothian, and unplanned shutdowns at Hunterston, Ayrshire and Dungeness, Kent.

But the group said the profit figure was still ahead of expectations, with a strong performance by its US operation preventing it falling into the red.

Earlier in the week, British Energy announced plans to cut 400 jobs in the next four years to reduce its UK nuclear generating costs by £150m.

The job losses will be predominately in the generating division, and will include losses at Hartlepool Power Station, Teesside, which employs 450 staff.

A British Energy spokesman said the group was pleased with the results, as last year it had anticipated making a loss of up to £50m during the trading period.

The group's turnover for the year to the end of March was up at £2.12bn, from £2.06bn the previous year.

British Energy, which runs nuclear and coal power stations, said it planned to continue developing its business in North America, where it saw more potential for growth than in the UK.