Utilities plug into B2B solutions

Two groups of major US and UK utilities have announced the formation of consortia to create Internet-based business-to-business (B2B) exchanges for the procurement of equipment and services. The two consortia – a group of 15 US utilities and a separate group of UK utilities – hope to achieve major savings by combining their purchasing power and buying through the Internet.

The US consortium includes American Electric Power, Cinergy Corp., Duke Energy, Reliant Energy and TXU. They said that the group came together in early March, primarily as a defence against consultants that were encouraging them to do something with the Internet. The partners, which also include Edison International, Sempra Energy and Consolidated Edison, said that they expect initial savings to be around five to eight per cent, rising to as much as 30 per cent in the future.

In the UK, Scottish Power, United Utilities and Northern Electric announced in April their intention to have a B2B procurement exchange established by late summer. Other shareholders in the project include IBM and PricewaterhouseCoopers, who will help to establish the new service. Other European utilities could also be invited to join the consortium.

The exchanges will function as clearinghouses where the utilities will post their procurement needs and suppliers will bid for orders. Such systems.

Nomura rescues flagging UK utility

Japanese investment bank Nomura International has agreed to buy troubled Welsh utility Hyder plc for £402m ($251m). The 260p per share cash offer is something of a relief for the debt-laden utility and brings to an end uncertainty surrounding its future.

The deal represents a 37 per cent premium over Hyder’s share price of March 27. Nomura, a specialist in reviving struggling companies, said that it would not break up the firm, but did not rule out the sale of some of Hyder’s non-regulated assets. The deal is unlikely to meet with opposition from the energy or water regulators.

Hyder’s regulated businesses include electricity distribution, water, sewerage and gas supply. The company was formed in 1996 from the takeover by Welsh Water plc of South Wales Electricity. Its financial performance has suffered from regulator-imposed price cuts, investment obligations and the 1997 government imposed windfall tax.

Fuel cell development

US fuel cell developer Plug Power has signed a joint development agreement with Axiva GmbH of Frankfurt, Germany, to develop a high temperature membrane electrode unit (MEU) that will reduce the cost of Plug Power’s residential fuel cell system.

Axiva’s high temperature MEU will enable the fuel cells to operate reliably above 120°C, improving fuel cell tolerance and increasing overall cycle efficiency. It will also enable the simplification of the fuel processor, helping to reduce cost.

The two companies will work together to reduce the cost, size and weight of the high temperature MEU unit to make it more commercially attractive.

Consultant alliance

Deloitte Consulting and Npower have formed a strategic alliance designed to benefit companies operating in the power generating sector worldwide. The venture will target deregulation-driven competitive markets. Each company will hold a 50 per cent stake, and will seek to enable power producers to lower costs and provide greater value to end-consumers .

CSC buys BNFL IT group

Computer Sciences Corporation (CSC) has announced that it has bought IT Services Limited from British Nuclear Fuels (BNFL). The acquisition will help CSC develop its presence in the European utilities industry.

IT Services is an information technology services subsidiary with operations and clients in the energy, utility and healthcare industries. It has revenues of £40m ($64m) and employs 500 personnel throughout the UK. The sale of IT Services by BNFL will allow it to focus on its core competencies.

As part of the deal, CSC will provide BNFL with IT services for a five year period.

GE acquires Woodward unit

US company GE Power Systems has agreed to acquire the turbine control retrofit business of Woodward Governor Company Global Services. The sale includes a product agreement from GE Power Systems for Woodward to supply controls to GE for application in the retrofit business.

The deal will enable GE to provide a broader range of services worldwide. Woodward’s turbine control retrofit business had 1999 revenues of $50m and employs around 300 people.

News digest

Enel rises: Italian utility Enel has reported a six per cent rise in its group net profit for 1999 to lire4.54tr ($2.24bn). It said that its operations were boosted by cost rationalization, and increased efficiency and productivity. The state-controlled utility floated a 30 stake per cent on the Milan stock exchange in 1999 and announced a higher-than-expected dividend of lire 232 per share. Consolidated sales in 1999 rose two per cent while gross operating margin jumped 5.6 per cent to lire17.38tr.

Internet boosts Enron: Enron Corp. of the US has announced that its first quarter earnings per share rose higher than expected as Internet-based trading boosted core wholesale energy operations. Revenues rose 72 per cent while the volume of gas and electricity marketed by the company rose 43 per cent. Chairman and CEO Ken Lay said that the strong growth was in part due to the company’s EnronOnline Internet trading initiative.

GE rentals expands: GE Energy Rentals is to add Jenbacher natural gas reciprocating engines to its portfolio of rental power generation products. The 1000 kW natural gas-fueled model will enable GE to diversify the range of units offered to its customers and extends an agreement between the two companies signed in 1999 for the distribution of Jenbacher units in North and South America.

HoustonStreet expands: HoustonStreet Exchange, a developer of on-line energy trading platforms, has attracted venture capital funding from kRoad Ventures and Vivendi. The deal will enable HoustonStreet to bring online energy commodity trading to Europe and to build on its Internet-based trading portal, HoustonStreet.com.

Siemens gets go-ahead: The European Commission has given the go-ahead to a joint venture in the hydropower sector between Siemens and the German hydropower turbine producer Voith AG. The new joint company will regroup the hydroelectric sector activities of both companies.

Siemens cooperation: The Siemens Power Transmission and Distribution Group and the consulting and software house FrankenData of Germany have agreed to cooperate in providing the energy market with new high-performance service and software solutions. One project that the companies have undertaken is the development of new energy balance management software that gives distribution network operators in Germany a platform for handling transmission through their networks in accordance with the regulations of the country’s new association agreement.