Enel restructuring plans

Enel has outlined a range of measures that restructure financial and management operations in a step towards its partial privatization.

The group is preparing to sell off three new generating companies in what should be the largest initial public offering in the world. This is in compliance with Italy’s continued commitment to liberalize its electricity sector.

The new companies which would manage a total of 15 000 MW of generation could be sold next year.

An adviser to the Italian Treasury said: “The structure of each company will broadly reflect that of Enel itself. The government has given Enel several years to create and set up these new generating companies but it is highly likely the entire operation will have to take place next year.”

Enron looks to sell Sutton Bridge

Enron is hoping to capitalise on the increases in values of UK power stations by seeking potential buyers for the Sutton Bridge power station.

The 790 MW gas fired combined cycle station, which cost à‚£337m to build, was only commissioned this year. Several large UK and international generators and power suppliers have expressed an interest in buying a stake in the plant.

Enron said there had been changes in the UK market, increasing the value of power station investments since it started building the plant in 1997. It was now looking to capture some of that increased value of the plant.

The company said, however, that it had no plans to sell its interests in the 1875 MW Teesside cogeneration plant and that it would continue to seek permits to develop two further 1200 MW gas fired plants at the Isle of Grain in Kent and Rassau in Gwent, Wales.

Structure of German market remains unclear

The structure of the German electricity market remains unclear though agreement between government and industry on eight areas of regulatory control has been achieved, according to Wolfgang Heller, president of the German industry federation (BDI).

Germany is disturbed by the prospect of really open competition, especially from EDF which is seen as a foreign monopoly.

Discussion is now focusing on whether there should be a pan-European network or two trading zones divided by the river Main. The idea is that future competitors would have to pay network charges for transporting electricity across the zone boundary.

The electricity industry association VDEW, favours the two zone model. It claims this is the only way of preventing EDF or Scandinavian producers from using the German network as a “cheap transit”.

The two zone model is, however seen as presenting a number of problems because of its potential restriction of free trade in the Single Market. The government is keen to ensure that Third Party Access to the network is covered by “detailed regulations for competition”.

The German Cartel Office (BKA) last month, for the first time, ordered an electricity supplier to allow electricity from competitors to pass through its network.

BKA ordered Berlin-based group Bewag AG to allow EnBW (Energie Baden-Wuerttemberg), VASA Energy and RWE to use its network to deliver electricity to the Berlin Parliament, private clients and industrial companies.

The head of the BKA, Dieter Wolf said it was something of a “pilot decision” which had implications far beyond Berlin. He said the BKA would not tolerate any hindrances whatsoever to full and complete competition.

Fuel cells receive a boost

The development and commercial exploitation of fuel cell technology received a boost with the signing of a memorandum of understanding between international energy company BG plc – acting through its independent research and development arm, BG Technology – and the Alstom company.

The aim of the agreement is to commercialize Polymer Fuel Cell (PEM) technology in natural fuelled stationary power systems in the UK and internationally.

Eastern in Finnish joint venture

European energy company Eastern Group has formed a joint venture with Pohjolan Voima Oy (PVO), Finland’s second largest electricity generator.

The joint venture will be 81 per cent owned by Eastern and and 19 per cent by PVO. The agreement is part of Eastern’s strategy to build a pan-European energy portfolio.

As part of the transaction, the joint venture will acquire about 600 MW of PVO’s thermal generating capacity. Eastern is paying about Euro300m for its share in the joint venture.

PVO has total generating capacity of 3.4 GW owned by industrial shareholders.

In a separate move, Eastern Group has become the first UK energy company to join the Amsterdam Power Exchange.

The company became a shareholder in the APX earlier this summer. The APX which is a physical 24-hour ahead market, aims to increase membership (currently 19) to 30 by the end of the year.

News digest

Belgium: The Belgian electricity and gas regulator said it would produce a multi-year plan for future cuts in electricity tariffs by the end of the year.

France: A leading French industrialist has called on the government to speed the opening of its electricity markets to force prices down. Bertrand Collomb, chairman of Lafarge said the electricity costs for French industry were no longer competitive and that the company had felt the first effects of deregulation in Germany “but unfortunately not in France”.

Italy: Enel has made its first move to enter the Tunisian power generation market. Enel is in negotiations to construct small cogeneration power stations of between 5 MW and 10 MW at a cost of $10-20m. Tunisia is undergoing partial privatization, opening the sector to foreign investors who could produce electricity directly or via an industrial partner.

Portugal: Siemens has handed over the Tapada do Outeiro power plant to the Portuguese operating company Turbogas SA. The plant is Portugal’s first gas fired combined cycle power station.

Spain: ABB Alstom Power has won an order to supply a gas turbine for a cogeneration plant near Barcelona. Under the contract the company will supply a 5.25 MW unit for Lipidos Santiga S.A. The unit will enter commercial operation in January 2000.

Spain: Grupo Iberdrola announced last month that it will build and operate a power plant at the Spanish works of BASF AG in Tarragona, in partnership with RWE Energie.AG. This marks RWE’s entrance in the Spanish market in what is believed to be a 50 per cent share of the partnership.

UK: The government has rejected plans to build a 54 MW gas fired station at Didcot in Oxfordshire. The plant was to be built by electricity company, Scottish and Southern. The government said the restrictions aimed at protecting coal sales, would remain in force until more competitive trading arrangements were introduced next autumn.

UK: Mitsui Babcock officially opened its new multi-fuel burner test rig. The new facility is capable of testing power station burners up to 90 MWth and can be fired on coal, oil or gas or a combination of these fuels. The main purpose of the facility in Renfrew, Scotland will be to continue development of low NOx burners.

UK: A Financial Times report noted power generators in the UK are coming under pressure from major clients over wholesale prices compared with those practiced in the rest of Europe – especially France.

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