Endesa wins Elettrogen bid
Italian electric utility Enel announced in July that it has agreed to sell Elettrogen to a consortium led by Endesa of Spain for Euro Dollar 2.63bn ($2.3bn) in cash. The deal marks an end to the first of three sell-offs by Enel, and will boost Endesa’s presence in Europe.
The Endesa-BSCH-Asm Brescia consortium gained control of Elettrogen, an electricity generator, after an international bidding process which initially attracted seven consortia. The consortium will take on Elettrogen’s Euro Dollar 1bn debt and is committed to investing a further Euro Dollar 1bn by 2005.
Other bidders pulled out of the auction because they regarded the price to be too high. Elettrogen, which accounts for just over seven per cent of the Italian electricity generation market, was thought to be worth around $1.3-2.6bn when it was first put up for sale.
For Endesa, the acquisition is a major part of its plans to expand in Europe. The company has a Euro Dollar 5bn war chest to invest in European power generating companies, and plans to create a European trading operation with 8000 MW of capacity by 2006.
Alongside Endesa, other consortia to enter the final rounds of bidding include the Edison-Sondel consortium and Italpower, a group composed of Acea, SanPaolo IMI and Banca di Roma.
EDF gains Italian stake
The moves made by Electricité acute accent de France (EDF) to gain a foothold in the Italian electricity sector succeeded in July when the Italian market regulatory body gave the go-ahead to the hostile takeover of Montedison by Italpower. Italpower, in which EDF holds 18 per cent, now controls 52 per cent of Montedison.
Montedison, an industrial conglomerate which owns two Italian power companies, dropped its opposition to Italpower’s bid after the consortium increased its offer from Euro Dollar 3.07 ($2.7) per share to Euro Dollar 3.16 per share.
The deal could face opposition from the European Commission, which has decided to investigate the acquisition. The Commission has asked Fiat, the majority shareholder in Italpower, to notify it of its plans for Montedison.
EDF now owns a share in Italy’s second-largest generator, Edison.
Saltend sold to Calpine Corp.
Houston-based Entergy Corp. has agreed to sell its 1200 MW power plant in Saltend, UK, to Calpine Corp. for $800m (Euro Dollar 916m). On announcing the deal, Entergy said that it remained committed to the European power market and would continue to operate the 800 MW Damhead Creek plant in the UK.
“While Saltend is a state-of-the-art facility, selling it offered Entergy a substantial opportunity to immediately harvest value and redeploy capital,” said J. Wayne Leonard, CEO of Entergy. “The sale of Saltend allows us to reduce consolidated debt and maintain the desired balance and risk in our portfolio.”
E.ON, Verbund form new hydro group
German energy group E.ON and Austria’s Verbund have announced plans to merge their European hydropower interests into a single entity. The new company, known as European Hydro Power (EHP), will be headquartered in Salzburg and will be the second largest hydropower group in Europe
EHP will enter operation in 2002, uniting indebted Austrian hydropower companies with more efficient German plants. It will operate around 200 plants with a combined capacity of 9600 MW, offering both partners economies of scale and an improved finance structure.
Verbund will hold a majority stake in the enterprise with 60 per cent. E.ON’s ‘back seat’ role in EHP has surprised some industry observers who believe that a merger of distribution networks of the two companies could be on the cards.
E.ON has gained a key stake in Ruhrgas, Europe’s largest gas distributor, through a multi-billion dollar asset swap with BP.
Customer service is key
A new report by market analysts Datamonitor has found that electricity companies throughout Europe are losing $250m through inefficient customer service. A large number of customers are confused by their invoices, says the report, with 17m customers querying their electricity bill in the last 12 months.
Datamonitor’s ‘Impact 2001’ survey suggests that utilities need to improve the quality and clarity of their bills and overhaul their customer contact architecture in order to help retain customers and achieve greater cost savings.
The report also notes that the internet and telephone are the two most cost-effective customer service communication channels. Datamonitor believes that suppliers could save $250m by reducing the amount of customers dealt with face-to-face from 55 per cent to 20 per cent.
International: The United Nations Environmental Programme has welcomed the strong push for renewable energy suggested at the Group of Eight (G-8) summit held in Genoa, Italy, in July. The UN agency wants to increase the 100m people that are globally served with renewable sources of energy by 1bn by 2010.
Belgium: Belgian utility Electrabel SA plans to buy the European electricity assets of Belgium’s Tractebel SA for $507m. The deal will give Electrabel complete control of Tractebel’s units in Scandinavia, Germany and Poland, and also major shareholdings in power plants in Italy, Portugal and Hungary.
Norway: Vattenfall AB and Norwegian power group Hafslund ASA have signed an agreement of intent under which Hafslund will purchase Oslo Energi, a wholly-owned subsidiary of Vattenfall Group. Vattenfall will become part owner of a new Norwegian power group which will be formed as part of the deal and Hafslund’s merger with Viken Energinett. The deal will make Hafslund one of the largest players in the Nordic electricity transmission and sales market.
Spain: BP plans to invest over $100m in acquiring Agere System’s semiconductor plant in Madrid, Spain, for the manufacture of photovoltaic cell systems. The facility will become one of the largest solar manufacturing plants in the world, producing 60 MW a year of high efficiency crystalline silicon Saturn solar cells to be sold globally with special focus on Europe, where there is an expanding demand for solar power.
UK: International Power has successfully completed its acquisition of the 1000 MW coal-fired Rugeley power station from TXU Europe. The acquisition will add to International Power’s total installed generating capacity, raising it to 15 000 MW, and will also improve its fuel diversification.
UK: The installation of one of three ABB 400 kV/275 1000 MVA transformers marks the first successful stage of National Grid’s upgrading and extension programme at its Stella West substation in north-east England. The project is a key element in the upgrading of the existing 275 kV Anglo-Scottish interconnection to 400 kV.
UK: Electricité acute accent de France (EDF) wants its power exports to the UK classified as hydro-electric rather than nuclear generated, giving it exemption from the UK’s new climate change levy. If EDF’s request is granted, it is considered likely that that the French utility would claim a subsidy from the Renewable Obligation Certificate scheme that the government is drafting.