British multi-utility Centrica plc, today announced that its subsidiary British Gas Trading Limited had entered into an agreement with Enron’s UK administrators, PricewaterhouseCoopers, to acquire its energy customer business and certain of its assets at a cost of £96.4m ($138m) in cash.
Centrica fought off competition from French power group EdF and UK utility Innogy, both of which had been in discussions with the administrators.
Enron Direct Limited (EDL) is principally engaged in the supply of electricity to commercial customers many of whom had expressed concern following the collapse of the Enron group and appointment of administrators in the UK.
EDL started trading in 1996 and has grown rapidly. Turnover was £190m for the ten months to October 2001, up substantially from £97m in EDL’s last full financial year to December 2000.
Enron has 160 000 direct customers with longer term contracts of generally five years duration. Additional customers are served through licensed intermediaries. Operating assets being acquired, principally receivables, have a value estimated at approximately £47 million, according to a statement issued by Centrica.
Based on Centrica’s current evaluation of EDL’s customer base and balance sheet accounts, the cost per acquired customer associated with this transaction, is estimated at £197 (net of receivables outstanding and other benefits).
Mike Alexander, Managing Director of British Gas Trading, said, “This provides an ideal platform for advancing our plans for the commercial market. These longer term contract customers represent an attractive additional market segment for Centrica, with higher than average usage and annual bills of approximately £1300, more than five times the average domestic bill.
“This is an important acquisition in view of our aspirations in the small and
medium enterprise market. Our commercial electricity base, which currently
stands at 170 000 customers, will be almost doubled, bringing us closer to our target of being number one supplier in that market.”
It remains to be seen if paying for customers who would in any event be looking for an alternative supplier, proves to be a correct strategy.
The broader customer base should enable Centrica to realise further strategic and financial value from its power stations, better help Centrica to target the half-hourly metered electricity market and give it access to EDL’s customer care and energy forecasting systems.
Enron Direct Limited currently has 160 000 direct commercial customers,
148 000 electricity and 12 000 gas customers. In addition, a further 37 000
customers (primarily residential) are supplied through other service providers
A number of other companies were also said to be interested in buying the firm including U.S.-owned TXU Europe and Germany’s RWE.
Enron Europe went into administration on November 29, three days before its U.S. parent filed for Chapter 11 bankruptcy.