National Power prepares for break-up
UK utility and international project developer National Power has announced strong results for the year ended 31 March 2000 and has put forward a timetable for the demerger of its national and international business units. The company reported a ‘substantial’ recovery in international earnings and also strong performance in its domestic units in spite of heightened competition.
National Power said that the separation of its two main business units was now complete and that the demerger into Npower and International Power is scheduled for 2 October 2000. It has appointed new management teams to the two units and has developed strategies for developing new business.
Profits for its UK business fell to £515m ($321m) from £645m, mainly due to divestment of generating capacity, while profits in its international sector grew by £94m to £191m. The company said it transformed its UK business by reducing exposure in generation and acquiring a large gas and electricity retail customer base. On the international side, the strong performance reflected good operational performance of existing assets and earnings from newly acquired and commissioned assets.
Plug Power hits problems
Shares in Plug Power, the US fuel cell technology developer, fell in May after analysts downgraded the company’s stock on news that GE would no longer be buying fuel cell units that would have made up the bulk of Plug Power’s sales this year.
Plug Power’s stock fell six per cent after it was revealed that design changes made to its units relieved GE of a contractual obligation to purchase 485 fuel cells. Plug Power said that the fuel cells it was designing did not conform to specifications agreed upon in a February 1999 contract.
GE owns 12 per cent of Plug Power. The US engineering giant was to have bought the fuel cell units at a loss to Plug Power through the companies’ joint venture, GE MicroGen, and sell them on to residential customers for field trials.
Plug Power’s shares have lost nearly two-thirds of their value since hitting a 52-week high of $156 in January.
ABB concludes power generation sale
Technology group ABB has completed the sale of its 50 per cent share in ABB Alstom Power to Alstom. The deal has also received the approval of the European Commission.
In a statement, ABB described the move as “another milestone in the global technology company’s transformation to a knowledge and service-based business’. The company is aiming to increase the share of its business in service, IT, e-business and other high-tech and knowledge-based activities, and has shed a number of assets in heavy engineering, including its nuclear engineering unit.
ABB and Alstom merged their respective power generation activities in June 1999 to create the world’s largest supplier of power generation equipment. Having received the approval of Europe’s competition authority, ABB has received a cash payment reflecting the valuation of its share as well as outstanding issues between ABB and Alstom.
The view in Brussels is that the deal will not alter the competitive position of Alstom in the markets concerned.
Siemens-KWU acquires Fiat service business stake
Siemens-KWU has announced that it is to expand its power plant modernization business with the acquisition of a 50 per cent stake in Fiat Power Services SpA of Italy from FiatAvio, a subsidiary of the Fiat Corporation. FiatAvio will retain the remaining 50 per cent stake.
The deal gives Siemens a firm foothold in the Italian service business, expanding its worldwide fleet of fossil-fuelled thermal plants by around 200 gas turbines, or 8500 MW. Fiat Power Services has a workforce of around 60 and a turnover of around a50m.
Power plant supplier FiatAvio produces gas turbines under license to Westinghouse of the USA, which the fossil business unit of which Siemens acquired in 1998.
Alcatel considers IPO
Alcatel’s Board of Directors has approved a proposal to make an Initial Public Offering (IPO) for part of its cables and components. The IPO would take place before the end of 2000.
Alcatel believes that this move would give the business unit the autonomy and resources it needs to put in place an aggressive strategy aimed at making it the leader in the markets it serves. Products included in the IPO would be power cables, telecom cables, data and cabling systems and special cables. The spun-off unit would have revenues of a4bn.
ABB in Brazil: ABB has agreed to purchase MEGA Transformadores SA, a leading supplier of distribution transformers in Brazil. ABB is planning to quickly introduce new technology into the company to fuel its growth in the Latin American market. The acquisition is in line with ABB’s strategy to build a local presence in rapidly deregulating and privatizing electricity markets. The company now employs over 10 000 people in Latin America.
BP gives green backing: BP Amoco is planning to invest $50m in GreenMountain.com, a US marketer of ‘clean’ energy. The oil company has also agreed to a commercial arrangement under which it will market and promote Green Mountain’s products in the $100bn industrial and commercial power market in the USA. The funds are part of $100m raised by GreenMountain to drive its investment for the next year.
Enron joint venture: Enron is to enter into a joint venture with IBM and AmericaOnline to serve residents and small businesses in deregulated power and natural gas markets in the USA. The New Power Company will be launched with a capital injection of $120m in the second half of the year. It will compete with companies such as Utility.com which is providing power via the Internet in California, Massachusetts and Pennsylvania.
National Grid plans: UK electricity transmission group National Grid has said that it wants to buy a second US power company before the end of 2000, and has also announced two telecoms investments in South America. The group wants to build a strong electricity business in the USA as it opens its markets to competition and hopes to announce an acquisition of a similar size to NEES. Earlier in 2000 it completed the $3.2bn acquisition of NEES in the northeast USA.
ScottishPower plugs in: UK multi-utility ScottishPower is to form an e-business joint venture with SAIC to offer services for the global utility sector. The new company – Calanais – will target liberalizing utility markets in the UK, Europe and the USA and will employ around 600. It will offer advice and services to help companies in e-business matters as well as with call centres and customer care activities.
Tenaska-Diamond partnership: Tenaska Inc. and Diamond Generating Corp. have joined forces to form Tenaska Diamond LP, to operate and develop generating facilities. Tenaska Diamond will initially own four Tenaska power generating facilities totalling 3500 MW, and will look to jointly develop new facilities, particularly in the USA.