British Energy has slashed its output forecasts for the next financial year and held back part of its special dividend, as the impact of unexpected closures at two of its reactors takes its toll.

The nuclear operator, which has seen output fall at a time of rising electricity prices, has opted to pay out only 69 per cent of the maximum payable special dividend, underlining the operational uncertainty it faces.

At the same time, the company has revealed that its output for the next financial year could be up to 20 terra watt hours lower than the consensus analysts' estimate of 54.1 terawatt hours. Howerver, the company insists that this is a worst case scenario and expects its output to be around 46 terra watt hours, almost 15 per cent lower than anticipated.

British Energy said in January that its Hartlepool and Heysham reactors, which were closed this autumn when problems with faulty wiring were discovered, would remain closed for most of this year.

The closures mean that British Energy has to buy power in the market to provide to customers with which it has fixed-supply contracts.

The UK nuclear provider reported adjusted earnings of £745 million, down from £775 million, with earnings per share falling to 41.6p from 63.2p last time and operating profit fell to £563 million from £626 million.

A special dividend of 14.5p per share will be paid in April, saving about £70 million that the company could have paid out to investors.

Merrill Lynch analysts said that the company's decision to hold back some of the dividend would give it a degree of comfort in a period of lower output, higher costs and rising collateral requirements.

The nuclear power station operator, which wants to participate in the renaissance of nuclear energy in the UK, has also given warning that the soaring price of uranium will add substantially to its costs over the next decade, as long-term fuel purchase contracts come to an end.

It pointed out this morning that its annual fuel bills would jump by £146 million a year if prices remained at current levels.

The long-term market price of uranium is $95 a pound for January 2008, up from $85 a pound for January 2007.

British Energy has fixed-price deals for its fuel but these are scheduled to end in 2011 and it expects to have to pay considerably more for the metal.

Uranium prices are soaring because of global interest in nuclear fuel and restrictions of supply.

At close to $100 a pound, the metal has reached prices not seen since the 1970s and analysts expect that prices could climb as high as $140 a pound this year.

In 2002, uranium was less than $10 a pound.

The World Nuclear Association says that restocking by utilities, speculation by hedge funds and buying for new reactors is exerting pressure on uranium prices.

It expects 48 new nuclear power reactors to be operating by 2013, principally in China, India and Russia.

The British nuclear operator, which is looking at four reactor designs for the next generation of nuclear power in the UK, said that total output for the nine months to December 30, 2007, was 45.7 terawatt hour, up from 44 terawatt hours the year before, when it also had problems.

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