In a City office overlooking the Thames last week, one of British Energy's advisers turned to a colleague and asked with a smile on his face: "Would you ever lend British Energy money?" The answer was a firm "no". But then again, the adviser wouldn't even have raised the issue 18 months ago, for fear of being laughed out of the office.
That the question is even being asked today shows just how far the nuclear generator, recently saved from bank- ruptcy by the Government, has come. On Thursday, it reported operating profits of £57m and even added another £295m on to the value of its nuclear reactors because of the increase in wholesale electricity prices. One year after writing down their value by £3.7bn, it is a step in the right direction.
The word from Brussels is that the European Commission will approve the £5bn rescue package, although the decision will be delayed until the autumn. This is crucial, as without it, the Government will withdraw its support.
However, there are still some large question marks hanging over the company's future.
Why did it all go wrong?
Plunging wholesale electricity prices meant British Energy was losing hundreds of millions of pounds a year. It also had more than £3.5bn of decommissioning liabilities on its balance sheet that it could not afford. In September 2002, the Government stepped in to rescue it.
It lent British Energy £650m and set up a nuclear liabilities fund which will assume all its decommissioning costs. In return, the company must pay 65 per cent of its free cash flow into the fund.
The Government also cut the value of British Energy's compulsory reprocessing contracts with the state-owned British Nuclear Fuels.
Can it survive without state aid?
Probably not. The setting up of the liabilities fund takes a big burden off its balance sheet.
Brian Wilson MP, the energy minister at the time of the rescue, agrees that, as a result, its survival is more likely. "Nuclear companies must be expected to carry their current operating costs. But the fact it was carrying its liabilities contributed to its difficulties."
Now that electricity prices are rising, the company is turning in an operating profit again. Daniel Norton, an analyst at energy consultancy EIC, says that electricity prices should increase by another 20 per cent over the next two to three years, making capital investment in the power industry economically viable.
Because reactors do not emit carbons, nuclear has a big advantage over alternative methods of generation. The Government is introducing environmental regulations, such as carbon trading, which make power stations fired by coal, gas and oil more expensive to operate and nuclear reactors more competitive.
Do we need British Energy?
Yes. The company provides just under a fifth of the UK's electricity. It owns eight nuclear power stations and one coal-fired plant. The combined output of all these stations is 11,600 megawatts - or enough to provide electricity for 11 million people.
The Government knows that, like the railways, British Energy cannot be allowed to fail. Without the electricity it provides, the lights would go out. The question of what to do with its nuclear reactors would also not be solved.
A spokesman for the Department of Trade and Industry admits: "The Government stepped in because of the safety and security of supply issues. We thought it was right to give the company the chance to come up with a restructuring plan."
Someone still needs to operate the reactors. Because there is only limited nuclear technical expertise in the UK, if British Energy disappeared, the same people would just do the same job for a different company. American nuclear companies, or the continental nuclear operator Electricité de France, could run the stations instead, although they operate different kinds of reactors to the British Energy fleet. And politically, it might not be acceptable for foreign companies to run UK power stations.
Can a nuclear firm go it alone?
Yes, nuclear companies can not only stand on their own two feet financially, but operate as successful businesses - only within the right framework, however. The privatised nuclear industry in America, which also provides around a fifth of US electricity, is run profitably without government support.
Nuclear waste is not reprocessed but stored, which cuts costs. This approach is financed by charging 0.1 cents for every kilowatt per hour of electricity used, and placing these proceeds in an industry-wide fund. Around $750m (£410m) a year is put aside for storing waste and so far more than $18bn has been saved.
Federal law obliges nuclear companies to estimate the costs of decommissioning reactors. The operators must then make annual contributions into a trust fund in order to cover this. The US Congress found that, in 2000, the total amount set aside for decommissioning was $26.9bn - some 47 per cent over-funded.
In Europe, Finland provides an innovative solution for overcoming the costs of building a nuclear power plant free from government handouts. A coalition of around 60 Finnish companies, including heavy power users in the pulp and paper industry, recently formed a group called TVO. This agreed to fund 25 per cent of the start-up costs of a station. TVO's shareholders will also purchase the power from the 1600mw plant, guaranteeing its cash flow.
However, not everyone agrees that nuclear companies can survive on a standalone basis.
Mark Johnston, a campaigner at Friends of the Earth, says: "Without state support via grants, guarantees or other subsidies, nuclear is fundamentally incompatible with a market-based approach."
What is British Energy's future?
For the company to survive in the long term, the Government must agree to build more nuclear power stations. Most of British Energy's reactors will be decommissioned within 10 years. As they are phased out, so its source of revenue will shrink. Yet its costs will remain high, as the company will still have to spend millions of pounds on research and development and safety tests for the remaining reactors - to make sure they comply with regulations. Because no one else in the world operates its main type of reactor, it must do all this work itself.
And, as nuclear consultant John Large points out: "The reactors get more expensive and less efficient as they get older."
British Energy's fate, therefore, is tied to the wider debate about nuclear power. Last year's energy White Paper favoured renewable forms of generation, such as wind, over nuclear generation. But growing concern about climate change, and the polluting effect of conventional power stations, is forcing a rethink, even within the green lobby.
Dr Tim Lenton, earth system modeller at the Centre for Ecology and Hydrology, says: "I would take the modest dangers and risks associated with nuclear power generation over the much larger ones associated with climate change. I would pursue the nuclear option because I would consider nuclear as the lesser of evils by a long way."
The Government has set tough targets aimed at cutting carbon emissions, which cannot be met without carbon- free nuclear generation.
Mr Wilson says: "Public opinion and environmental thinking will lead government rather than the other way around. The more permanent carbon emissions reduction is, the more out of balance it is to get rid of nuclear." The nuclear industry also argues that new technologies means waste is cut to a minimum.
The alternative is renewable energy. The Government wants to generate a fifth of all electricity from sources such as wind power by the year 2020, but some believe that this is not realistic. It is estimated that more than 6,000 turbines would have to be built to meet this figure.
Critics believe that the benefits of renewables have been over-hyped anyway. Mr Large says: "In the 1950s, the nuclear industry misled the public about the benefits of nuclear power and how it would solve the world's energy needs. Now the renewables industry is doing the same."
It is unlikely that British Energy will ever be in a position to build new nuclear reactors. The likely financial conditions set by the European Commission will prevent it from investing in non-nuclear businesses, so it will never become a big energy group like Germany's RWE or Electricité de France, which can afford to finance their own nuclear reactors.
Shareholders who have lost over 92 per cent of their investment are unlikely to bankroll a new generation of reactors. Even Mr Wilson admits: "It has to be a long time before anyone would invest with great confidence in British Energy."
Like its ageing reactors, British Energy's time is running out, yet nuclear may yet rise from the ashes.
However, Mike Alexander, the company's chief executive, is optimistic: "All plant has a limited shelf life - we are no different. If new nuclear reactors are built, we would like to operate them."