E.ON in takeover talks with UK’s PowerGen

German utility E.ON sought to clarify market rumours in January and confirmed that it is in takeover talks with PowerGen of the UK. The move is in line with E.ON’s desire to become a leading European utility with global operations.

Both companies have played down news of their discussions. PowerGen generates around 14 per cent of electricity supplies in England and Wales, and serves over 2.6m customers. It recently acquired US utility LG&E Energy Corp. and has made a number of asset disposals to reduce debt.

Dermot Joyce, Principal Consultant with management support company OSI commented: “To date, E.ON’s stated strategy has been to expand within the European region. However, with the PowerGen acquisition comes a large US operation. This may represent a sensible shift in focus for E.ON.”

Bids for PowerGen became a more realistic option in 2000 when the UK government decided to relinquish its right of veto, which enabled it to limit any third party acquisition of PowerGen to 15 per cent.

  • E.ON has enlarged its stake in Sweden’s Sydkraft to 24.9 per cent through the acquisition of shareholdings of four Swedish municipalities.

RWE Plus wants working group

German utility RWE Plus has called for the formation of an industry-wide working group to overcome anti-competitive practices in the German electricity market. The move has been prompted by the way in which some utilities are interpreting the German grid access agreement, making it difficult for customers to switch suppliers.

RWE Plus says that it is “consistently supporting the interests of electricity customers and is demanding a customer-oriented interpretation … of the second Association Agreement on third party grid access”. It will consider taking legal action against utilities that “ignore the wishes of customers”.

A number of German utilities want to force customers that want to switch suppliers to purchase their grid use separately from their power supply. This will result in customers receiving two separate bills, which could put people off switching and hamper competition.

SOFC tests complete

A consortium of Dutch and Danish utilities and Siemens-Westinghouse Power Corporation has announced that a 100 kW fuel cell system has successfully completed its contracted operating period of two years, making it the longest operating high temperature fuel cell power system in the world.

The solid oxide fuel cell (SOFC) cogeneration system, supplied by Siemens Westinghouse, will be moved to a new site. Since starting up in December 1997, it has accumulated 16 612 hours of operation.

“The performance of the 100 kW system has been extraordinary, and we are very pleased with the operation of the [module],” said Ray George of Siemens Westinghouse Stationary Fuel Cell group. “I believe the fact that there has been no performance degradation over such a long period of operation is unique among all types of fuel cells.”

The SOFC system was supplied to EDB/Elsam and installed at a site in Westervoort, Netherlands, in late 1997. After its initial startup, the system operated for over 4000 hours before being returned to the USA for modifications. The rebuilt module was installed and restarted in March 1999, and has since accumulated nearly 12 600 hours of operation.

Wind investment

SeaWest, the US-based multinational group, has announced that it is to invest $40m (a42m) in a wind energy park in the Apennine mountain area of Italy. Some 30 wind turbines will be installed to generate 50 MW of power.

The 30 units will be built on Monte Cornoviglio. The local authority is aiming to generate revenue by leasing the land to the developer, and is also considering the development of local forestry for biomass-based power projects.

Approval expected for Spanish merger

The merger of Spain’s two largest electricity utilities is expected to be approved following a report by Spain’s competition authority, the TDC. Stringent conditions are likely to be imposed on the merger, however, to keep market dominance of the new group in check.

In a meeting held in January, the TDC voted in favour of the merger of Endesa and Iberdrola and has sent a report of its recommendations to the Ministry of Economy. It is thought to have recommended that the merged group have a share no larger than 41 per cent in the distribution market. The government is expected to make a final ruling on February 9, 2001.