Innogy becomes largest UK electricity supplier
Innogy Holdings plc has reached an agreement with Xcel Energy Inc. and American Electric Power to acquire a 94.75 per cent interest in Yorkshire Power Group Ltd. of the UK. The move will make Innogy the leading supplier of electricity and the second largest supplier of gas in the UK by volume.
Innogy, the demerged domestic arm of National Power, will acquire Yorkshire for a cash consideration of £508.6m ($726m, €811m) and assume debt of $2bn. The company’s strategy is to build a strong presence and achieve economies of scale in the UK energy supply sector.
Yorkshire’s main business operations are the supply of electricity and gas in the UK and the distribution of electricity in Yorkshire.
Yorkshire supplies 1.68m electricity and 360 000 gas customers across the UK.
The acquisition will bring Innogy’s customer base to 5.3m accounts and its share of the UK energy market to 11 per cent.
Innogy is also planning to roll out a range of new services to its enlarged customer base, including telecoms and insurance services for homes and small businesses.
Yorkshire also operates a metering services business.
RWE moves closer to Spanish market
German utility RWE stepped closer to gaining a major foothold in the Spanish electricity market in March when the Spanish stock exchange supervisory body, CNMV, approved its bid for Hidroélectrica del Cantábrico. RWE’s €26 ($23) per share bid now requires the shareholders’ approval.
RWE’s offer values Hidrocantábrico’s stock at €2.94bn. If the bid is accepted by the shareholders, RWE will make Hidrocantábrico the management centre for all of its activities on the Iberian Peninsula.
“The company is highly profitable, excellently managed and strategically very well positioned with a clear focus on growth, efficiency and customer base,” commented Dr. Dietmar Kuhnt, RWE’s CEO.
The company is inviting Spanish investors to join it in its investment in Hidrocantábrico, and has promised to retain the utility’s current management.
Hidrocantábrico supplies around 650 000 customers with electricity and gas, and is the fourth-largest electric utility in Spain.
RWE has targeted Spain in its European expansion plans due to the country’s projected four per cent electricity demand growth rate over the next few years.
AES enters Italy
US energy company AES has entered the Italian power generation market with the purchase of an oil-fired cogeneration facility in Sardinia. The 140 MW plant was purchased for an undisclosed sum from EniChem SpA, a unit of Italian energy group Eni.
The acquisition is part of AES’ plans to actively participate in Italy’s deregulating generation market. The facility, located near Ottana in Nuoro province, provides power, steam, compressed air and demineralized water to chemical plants on Sardinia.
“We are delighted to establish a presence in the deregulating Italian market,” said AES president and CEO Dennis W. Bakke. “We look forward to … progressing from this acquisition to develop a larger presence in Italy.”
Green goals override competition
The European Court of Justice has ruled that Germany’s law on subsidising power derived from renewable sources is in line with European Union (EU) law.
The landmark ruling paves the way for renewable generators to receive generous prices for their power from utilities.
The court ruled that the mandatory minimum charges payable by power distributors did not represent state aid.
The Association of German Electricity Suppliers (VDEW) remains opposed to the law, however. It believes that support for renewables should be more targeted and harmonized across the EU so that German Utilities and their customers are not disproportionally disadvantaged.
Crucially, the court cited the EU’s goal of environmental protection and reduction of greenhouse gas emissions in its ruling. It said that national renewable energy sources could be favoured over alternative imports to help achieve these goals, even if free trade principles were being violated.
The 15 governments of the European Union failed in March to reach an agreement on a deadline for fully opening the region’s gas and electricity markets to competition.
Sweden and the UK were among those pushing for full deregulation, while France stood in the way. The proposal must be approved by a majority of EU governments.
The member states were considering new European Comm-ission proposals to fully open their energy markets by 2005 at a summit in Stockholm, Sweden.