Hartlepool Power Station owner British Energy reported losses of £87m in its first set of quarterly results since restructuring its debts.

The nuclear generator's third-quarter deficit compares with £10m a year earlier, but it covers the three-month period before the completion last month of a £1.3bn financial overhaul.

British Energy avoided insolvency with a debt-for-equity swap.

Forward-selling of contracts meant British Energy did not see the full benefit of rising electricity prices, although it said half its output for the coming financial year had been sold at a higher average price of £25 per megawatt hour (MWh).

That compared with £20.80MWh in the third quarter.

Output during the three months was 15.8 terrawatt hours (TWh), following unplanned outages and structural inspections.

Average output over the next three years is likely to be about 61.8TWh, with analysts expecting an annual figure of about 68TWh by 2008.

Lower output, a fixed cost base and the impact of increases for fuel and pensions meant operating costs were £21.5 per MWh for the third quarter, up from £17.20 per MWh for the same period a year earlier. In a Government-backed scheme drawn up in October 2003, banks and bondholders wrote off about £1.3bn in debt in return for control of the group, leaving shareholders with only 2.5 per cent of the newly-created company.

Without the debt-for-equity swap, which also required the support of the European Commission, British Energy would have faced insolvency. It was plunged into financial difficulties by a sharp fall in wholesale electricity prices.

At the time of its restructuring, chief executive Mike Alexander warned it would take time for the company to address past under-investment and unacceptable output.

Losses for the first nine months of the year were £349m, an increase on the £81m reported a year earlier.

Underlying earnings were £11m, down from £26m a year earlier.

The East Kilbride-based group's sites are at Hartlepool; Heysham, in Lancashire; Hinkley Point, Somerset; Hunterston, Ayrshire; Dungeness, Kent; Sizewell, Suffolk; and Torness, East Lothian.