15 August 2002 – US utility Entergy is looking for a buyer for a UK power station which opened only 18 months ago, according to sources close to the company.
The Texas-based energy company is seeking bids for its 800 MW gas-fired Damhead Creek plant in Kent, southeast England, which the sources said is suffering from a slump in British wholesale power prices.
The plant came on line in February 2001 and has been valued at around à‚£300m ($463.4m). Damhead Creek is a merchant plant which sells its output into the spot market, leaving it more vulnerable to spot market price swings than plants selling their output under long-term fixed-price contracts.
Entergy this year wrote off its $55m (à‚£35m) equity investment in the Damhead power station, which was financed largely by debt. The company said it would have been required to increase its equity investment by up to $100m “to keep the project debt current”.
Wholesale power prices, pressured by market reforms and increased competition, have dropped 40 per cent in the last two years since the introduction of Neta, squeezing the profits of stations across the country and hammering down the value of generation assets.
Earlier this year, the Fifoots Point station in south Wales went into administration after its owners, U.S. group AES switched it off, citing low power prices. Administrators KPMG said it was close to securing a buyer for the 360-megawatt coal-fired plant but declined to comment further.
US groups in particular have suffered as power prices have fallen. Edison Mission, the US energy group, which paid à‚£1.3bn in 1999 for Fiddler’s Ferry power station in Cheshire and Ferrybridge in West Yorkshire, sold the plants for half that value last year to American Electric Power.
US energy groups were attracted to the UK after the electricity industry was liberalised at the beginning of the 1990s. At one stage, they owned eight