Acquisition

Centrica PLC
10 December 2002

10 December 2002

Centrica acquires gas and electricity supply businesses in Alberta

Centrica plc has today reached agreement to acquire for a consideration (payable
over two years) of C$130 per customer, or a total of approximately C$128.5
million (£52 million), the retail gas and electricity supply businesses of the
ATCO Group in Alberta, Canada, with 988,000 customers.

Following the completion of this transaction, and of the purchase of 860,000 AEP
customers in Texas, expected to be completed by the end of this year, Centrica
will have almost 5.5 million customer relationships in North America.

In Canada, Centrica's Direct Energy business will become the largest supplier of
energy and services to homes and small businesses with almost 4 million customer
relationships.

ATCO, which is the main regulated gas supplier in Alberta, supplies natural gas
to approximately 80 per cent of Alberta consumers, or around 821,000 regulated
customers, and electricity to around 14 per cent of the market, or 167,000
regulated customers.

Direct Energy intends to use this acquisition as a platform to expand in a
deregulated Alberta market, particularly in electricity through dual fuel fixed
price energy contracts. There are one million gas customers and 1.2 million
electricity customers across the province, most of whom already take gas from
ATCO. In addition Direct Energy plans to introduce a range of home services,
including the installation, maintenance and repair of residential heating,
ventilation and air conditioning systems.

The speed with which customers can be switched from regulated gas and
electricity supply contracts, where energy is supplied at break even, to
profitable fixed price unregulated contracts retained over the long term, is a
key driver of value behind this transaction. The Alberta government is committed
to choice for consumers and is expected to foster an environment which is
favourable to competition.

Sir Roy Gardner, Centrica chief executive, said: 'This is another strategically
important milestone towards creating a business of scale and value in North
America. It demonstrates the flexibility of our approach to finding ways of
entering markets at an early stage of deregulation.

'We intend to use the well developed skills we have in marketing, cross selling
of gas and electricity and product innovation to expand significantly in
Alberta, as we have already done in the UK.'

Many states and provinces in North America remain committed to effective energy
deregulation. However, as Centrica made clear at its interim results in
September, the pace of deregulation generally has slackened and this has
resulted in a slower rate of organic growth in customer relationship numbers.
Centrica remains committed to growing a substantial North American business both
organically and through acquisitions, focusing, as always, on value creation.

The ATCO transaction includes a 10 year agreement, with a five year break
clause, under which ATCO's I-Tek subsidiary will carry out billing and customer
care functions for Direct Energy in Alberta (see notes to editors). ATCO is
retaining its energy transportation and distribution operations.

The transaction is subject to the satisfaction of certain conditions, including
the receipt of required regulatory approvals and the promulgation of legislation
that reflects the market refinements announced by the Minister of Energy in
August 2002. Completion is expected by mid to late 2003. It is expected the
Alberta Legislature will consider these legislative changes in the spring of
2003.



NOTES TO EDITORS AND INVESTORS:

Background to the deal:

The consideration for the acquisition of ATCO's energy supply business will be
payable in cash, with approximately C$55 (£22) per customer payable on closing,
approximately C$40 (£16) one year later and approximately C$35 (£14) two years
later.

The customers being acquired formed part of an integrated utility and there is
therefore no separate historical financial information available relating to net
assets and profits of these retail customer operations components.

In Alberta, average annual residential bills are between C$960-C$1,200 for both
gas and electricity.

Centrica's 10 year exclusive agreement with ATCO's I-Tek subsidiary includes the
provision of customer care functions, including call centre, billing, credit and
collections services. The contract includes a five-year break clause under which
Centrica has an option to exit the contract at a cost of C$30 million. This cost
reduces over time from five years onwards. There are also opportunities to
realign pricing of the contract in line with market rates. I-Tek was developed
by ATCO to provide customer care and billing for ATCO's regulated customers.
I-Tek will not be allowed to provide billing or care services to any of Direct
Energy's competitors in Alberta.

Background on the Alberta electricity and gas markets:

The Alberta electricity market consists of approximately 1.2 million households,
of which 650,000 are served by EPCOR, based in Edmonton, and 400,000 by Enmax.
Both are municipally owned utilities. ATCO serves the remainder.

Electricity deregulation in Alberta commenced in 1999 with industrial and large
commercial customers, while deregulation for small commercial and residential
customers began in 2001.

The gas market, which was fully opened to competition in 1996, consists of
around one million households. The second largest gas supplier is Alta Gas with
60,000 customers.

Scope of Centrica's North American operations:

This is Centrica's third retail acquisition in Canada. Initial retail
acquisitions were Direct Energy Marketing in 2000 and, earlier this year, the
home and business services division of Enbridge, comprising 1.7 million customer
relationships, mainly in Ontario. Currently Centrica has around 3 million
customer relationships in Canada.

In the United States, Centrica will have around 1.5 million customer
relationships through its Energy America and New Power brands and through its
purchase of 860,000 AEP customers, expected to be completed by the end of this
year. It is active in five states in the USA.

ABOUT CENTRICA:

Centrica is a leading provider of energy and other essential home services. In
2001, it had a turnover of £12.3 billion. In the UK, Centrica offers gas and
electricity supply and related products under the British Gas brand, roadside
and financial services from the AA, telecoms products and services through
One.Tel and British Gas, and financial services through Goldfish. The group's
strategy of international expansion has seen it make acquisitions in North
America and Europe. It has over 32,000 employees globally, mostly in the UK.
More information is available at www.centrica.co.uk.

ABOUT ATCO:

ATCO Group is an Alberta based corporation engaged in five principal business
groups that are active world-wide: power generation, logistics & energy
services, technologies, utilities, and industrials. It has more than 6,000
employees. In 2001 it had revenues of C$3.7 billion (£1.5 billion) and assets of
C$5.8 billion (£2.4 billion). It is quoted on the Toronto Stock Exchange. More
information is available on www.atco.ca.

Inquiries:

Centrica investor relations          01753 494900

Centrica media relations             01753 494085


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