Centrica PLC
29 May 2001
29 May 2001
Centrica delivers generation for growing electricity customer base
Centrica plc today announced that it has acquired a 60 per cent share in
Humber Power Limited (HPL) which owns and operates a 1260MW gas fuelled power
plant in Stallinborough, North East Lincolnshire, providing Centrica with
750MW average output.
The acquisition is made in partnership with TotalFinaElf (TFE), which is
increasing its current stake in HPL from 12.5 per cent to 40 per cent.
Centrica will assume responsibility for the day-to-day operation and
management of the entire plant and existing staff will transfer to Centrica.
The transaction provides Centrica with more than 15 per cent of peak demand
for its existing 4.4 million electricity customers. As part of its risk
management strategy the company has said it plans to source 20-25 per cent of
its future peak electricity requirements from its own generating capacity.
This agreement, which offers increased long term stability and protection
against major changes in electricity price changes, marks a significant step
towards that goal.
In partnership with TotalFinaElf (TFE), Centrica will acquire a 60% share in
Humber Power Limited (HPL), whilst TFE will increase its current stake in HPL
from 12.5% to 40%.
HPL was established in 1991 to undertake the development, construction and
operation of a power station in Lincolnshire comprising two phases, the first
phase with a registered capacity of 793MW and the second with a registered
capacity of 527MW. The plant has generated around 10 TWh of electricity per
annum from some 2 billion cubic metres of natural gas per annum.
Under the terms of the agreement Centrica will be entitled to 100 per cent of
the capacity of the first phase, which equates to approximately 60 per cent of
the total output of both plants. TFE will be entitled to the output from the
second phase.
The consideration comprises £31.3 million in cash and the assumption of lease
liabilities with a book value of £267m as at 31 March 2000. Centrica estimates
the effective price of the acquisition to be £374 per kW capacity. For the
year ending 31 March 2000 HPL made a profit before tax of £8.9m and had
closing net liabilities of £1.4m.
This agreement represents Centrica's first move into power generation and the
transaction is expected to be broadly neutral to earnings in the first year
and will improve should electricity prices firm from current levels while gas
prices remain stable. Cash flow is expected to be positive within the first
year. There will be no goodwill arising from the transaction.
Roy Gardner, Chief Executive of Centrica said: 'We have always maintained our
interest in acquiring generating assets such as this at the right price.
'Since the electricity market opened three years ago, we have attracted 4.4
million customers and are on course to reach our target of 7 million
customers. So far this year 400,000 customers have joined us and British Gas
has become the most recognised brand in the electricity market.
'Today's acquisition provides more than 15 per cent of peak electricity demand
and reinforces our commitment to grow our electricity business and to continue
offering customers a competitive package.'
Enquiries:
Centrica Media Relations: 01753 758445
Centrica Investor Relations: 01753 758114
Notes to editors:
1. Centrica plc trades as British Gas, Goldfish and the AA in Britain and
under the Direct Energy and Energy America brands in North America.
2. The profits to March 2000 were before the introduction of NETA, and it
should be noted that HPL's contractual arrangements have been
substantially revised as part of this transaction.
3. New employees will be employed by British Gas Power Generation Ltd.
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