DALLASà‚–TXU Europe, a wholly owned subsidiary of TXU, has agreed to purchase United Utilities’ retail electricity and natural gas business, Norweb Energi, for 310 million pounds sterling ($465 million). TXU Europe’s retail business, Eastern Energy, has 2.7 million electricity and 700,000 gas customers. The addition of Norweb’s 1.8 million electricity and 400,000 gas customers will create the United Kingdom’s largest electricity and second largest energy retailer with over 5.6 million customer accounts. At the same time, TXU Europe has contracted its customer services operation to Vertex, United Utilities’ customer services business, for the next seven years.
All UK customers have been able to choose their energy supplier since 1999. The retail business is the non-regulated sale of electricity and natural gas while the delivery systems (distribution and transmission wires and pipes) remain regulated. TXU Europe will now be responsible for providing electricity and natural gas to over 5.6 million customer accounts while Vertex will handle the related customer services operation.
Phil Turberville, TXU Europe chief executive said: “This deal represents a further step in the execution of our flexible portfolio management business model and provides significant scale in our retail operations.”
“In one step, we are increasing our customer base, adding presence in another important region and transferring our customer services operation to an organization that is also focused on providing leading edge customer service. There is considerable scope to grow the penetration of gas accounts within the electricity customer base and the resulting transformation of our customer base should be reflected in even better service, increased efficiency and increased opportunities to offer customers innovative products and services.”
“Importantly, the transaction also adds flexibility and balance to our diverse portfolio. With our exceptional risk management and trading capabilities we are very well positioned to maximize value for our shareholders and customers.”
The acquisition will be funded initially from internal sources and ultimately through asset sales.
With headquarters in Dallas, TXU is a multinational leader in electric and natural gas services, merchant trading, energy marketing, telecommunications and other energy-related services. TXU is one of the largest investor-owned energy services companies in the world with over $18 billion in revenue and over $40 billion of assets. TXU has 30,000 MW of power generation and sells 250 terrawatt hours of electricity and 2 trillion cubic feet of natural gas annually. Upon completion of this transaction, TXU will deliver energy to eleven million customers primarily in Texas, the United Kingdom and continental Europe and Australia.