London Electricity, the UK utility owned by Electricité de France (EdF), Monday confirmed that it was buying the distribution assets of Eastern Electricity – part of the TXU group. The deal, which also includes TXU’s West Burton coal-fired power plant and the 50 per cent interest in network maintenance company 24seven, it does not already own, values the assets at £1.8bn ($2.6bn) and will be subject to EU approval.
Eastern Electricity’s wires business will cost EdF £560m along with debt of £750m and a further £140m for bonds “out of money”.
“We reckon it’s about a 26 per cent premium to RAV (regulatory asset value),” Gary Wiffin, Deputy Treasurer at TXU Europe, reported the Reuters news agency.
The sale by TXU allows it to concentrate on its electricity and gas retail activities in the UK and Europe. TXU has been disposing of its generating assets and over the summer sold its 1000 MW Rudgely power station to International Power and another 705 MW plant to Centrica. The sales have netted TXU some £1.5bn, well above its £1bn target.
TXU now has 5.5m energy customers in Britain and has recently extended the TXU Energi brand to its former Eastern Electricity and Norweb customers.
EdF bought the distribution network of London Electricity for £1.9bn in 1998. The French state-controlled company supplies gas and electricity to 3m customers, mostly in London and the Southwest.
Indications are that EdF will bid for the south-east England electricity supplier Seeboard, if as expected, the company is put up for sale by its present US owners, AEP next year.
24seven was established as a joint venture by TXU and London Electricity in order to separate the maintenance of the system and create an organization with expertise, capable of accepting service contracts from other utilities. The concept has been slow to get off the ground and, with TXU no longer having an interest in the distribution assets, it has decided to relinquish its interest.