Notification of Close Period

RNS Number : 7264Z

Scottish & Southern Energy PLC

28 September 2009

 



SCOTTISH AND SOUTHERN ENERGY PLC

NOTIFICATION OF CLOSE PERIOD AND MAJOR PROJECTS UPDATE

Scottish and Southern Energy plc ('SSE') will enter its close period on 1 October 2009, prior to the publication on 11 November 2009 of its financial report for the six months to 30 September 2009.

SSE's adjusted profit before tax for the six months to 30 September 2009 is expected to be significantly higher than in the same six months in 2008, when it was exceptionally low. For the year as a whole, SSE still expects to deliver: a moderate increase in adjusted profit before tax; and an increase in the dividend per share of at least 4% more than inflation.

SSE is now 18 months into its five-year, £6.7bn programme of investment for the period to March 2013. The status of the major projects within the programme is as follows:

• Glendoe: Investigations have confirmed that the fall of rock in the tunnel carrying water from the reservoir to the power station is very substantial, but confined to a section near the top. SSE is now working with its principal contractor and others to determine how best to effect the necessary repairs and achieve a resumption of electricity generation at the site, but this will not take place until well into 2010 at the earliest.  
  

• Marchwood:  The final reliability and performance tests of the 840MW CCGT (combined cycle gas turbine) plant in Southampton being developed by Marchwood Power Ltd, a 50:50 joint venture between SSE and ESB International, are now well under way. The plant should be in operation, as expected, by the time SSE publishes its six-month financial report in November. With a net thermal efficiency in excess of 58%, it will be one of the most efficient gas-fired power stations in the UK. When the station becomes operational, the installed capacity of SSE's electricity generation portfolio (including its share of joint ventures and associates) will increase to around 11,500MW. SSE's total investment in Marchwood will be £200m (comprising equity and debt). All of the station's output is contracted to SSE.

• Greater Gabbard:  Offshore construction work at the 500MW Greater Gabbard offshore wind farm, a joint venture partnership between SSE and RWE npower renewables, has continued, with the installation of the first of the 140 turbine foundations (monopiles), and with installation of the offshore transformer platform also now under way. Before being installed, the monopiles are subject to a rigorous inspection process. This identified a number of defects in the original welding of the first three production batches, which has necessitated a repair programme. This is close to being successfully completed, but has had an impact on the initial timetable for offshore work. The long-term value of the project is unaffected. The placing of the transition pieces on to the monopiles is expected to commence later this financial year and the erection of the first turbines is now scheduled for the spring of 2010. Greater Gabbard, in which SSE has a 50% stake, is expected to have a load factor of over 40% and produce around 1,900GWh of electricity in a typical year, of which SSE will take 50%. The wind farm is expected to require a total investment by SSE of around £650m, excluding connection to the electricity grid. SSE's contractors remain confident that there will be sufficient progress during the coming months to ensure the project remains on course to produce electricity for the first time in 2010 and to be completed on schedule by 2012. 

• Clyde:  Pre-construction work at SSE's 350MW Clyde wind farm in southern Scotland is nearing completion, allowing full construction work to get under way, as expected, later this year.  Earlier this month, a contract was placed with Siemens for the provision of the turbines.  Following agreement on a primary radar mitigation scheme in July, discussions are progressing on the secondary radar issues.  Clyde is expected to have a load factor of around 35% and produce over 1,000GWh of electricity in a typical year. Its construction cost is expected to be around £500m and it should be completed in 2012.

• Griffin:  Pre-construction work is also under way at the 136MW Griffin wind farm in Perthshire, in which SSE currently has a 90% stake, in advance of full construction work beginning later this financial year. Its construction cost is expected to be around £200m and it should be completed in 2012.

• Beauly-Denny:  The Scottish government has said that Ministers expect to take a final decision on the proposal to replace the Beauly-Denny electricity transmission line, of which 200km is in SSE's Scottish Hydro Electric Transmission area, 'later this year'. In August 2009, the Marine Energy Group of the Forum for Renewable Energy in Scotland said 'it is essential that the Beauly-Denny link must be consented urgently by Scottish Ministers'.  Preparatory work to allow a prompt start to the pre-construction phase, should consent be granted, is continuing.

• Aldbrough:  Commercial operations at the gas storage facility being constructed at Aldbrough in East Yorkshire by SSE and Statoil (UK) Ltd are continuing. Initially, Aldbrough is providing around 60mcm (million cubic metres) of capacity.  To form gas storage caverns, salt deposits around 2km under ground are leached by seawater, which, in turn, is replaced (dewatered) by gas under pressure. The dewatering of another cavern, with around 40mcm of capacity is now complete, and this capacity should become available for storage by the end of this year.   As stated in its Interim Management Statement in July, SSE expects its total investment on engineering and construction at Aldbrough to be around £290m.

Ian Marchant, Chief Executive of SSE, said:

'Ensuring Marchwood becomes fully operational in the next few weeks is the most immediate priority in our programme of projects and investments. That, along with the return to service in June of Medway power station, means we have a portfolio of gas-fired power stations that should be able to make a much more significant contribution than last year to meeting the country's energy needs this winter. The same applies to our coal-fired power stations, with the removal earlier this year of restrictions on running hours at Fiddler's Ferry and Ferrybridge and last month's acquisition of Uskmouth. Our enhanced generation portfolio and other major projects will support sustained real growth in the dividend in the years ahead.' 

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