North America

UK competition forces utility realignment

Issue 6 and Volume 7.

UK competition forces utility realignment

The retail energy supply assets of two UK utilities changed hands in June, bringing further evidence of companies realigning themselves in response to competition. Nuclear generator British Energy agreed to buy the supply business of South Wales Electricity (Swalec) from Hyder, while South Western Electricity (Sweb) sold its supply business to EDF-owned London Electricity. Both deals need regulatory approval.

British Energy will pay £105m ($169m) for Swalec`s supply business, which serves 980 000 electricity customers and 320 000 gas customers. The deal is a cue for British Energy, which has wanted to buy a domestic electricity supply business for months.

London Electricity is to buy Sweb`s retail arm for £160m. Sweb serves 1.3m electricity customers and is owned by Southern Co. and Pennsylvania Power and Light of the USA. London Electricity is acquiring the business as part of its plan to become a major player in the UK market.

The UK electricity market is now fully deregulated and competition is strong as utilities attempt to maximize their customer base.