Centrica buys €212m power station
British Gas owner Centrica today cushioned itself against future swings in energy prices by buying a power station for £142m (€212m).
The acquisition of the Killingholme station near Grimsby means Centrica can meet 43% of peak domestic demand for electricity in 2005, up from its current mark of 32%. It buys the rest from the open market.
The deal will benefit British Gas customers who can look forward to fewer changes in their bills at times of volatility in energy prices.
Killingholme, which employs 62 staff, has been managed by creditor banks since late last year when US-based power giant NRG reduced its exposure to energy markets in the UK.
Its acquisition comes just days after rival Scottish Power snapped up the indebted Damhead Creek station near the Isle of Grain, Kent, for £317m (€474m).
Chief executive Sir Roy Gardner said today: “Killingholme will help provide increased long-term stability against electricity price fluctuations.
“It also boosts our generation capacity at a time when the market has seen increased wholesale costs.”
The station will lift Centrica’s power generating capacity by a quarter to 2910 megawatts and will operate in tandem with its five wholly owned power stations in the UK.
In addition to a 60% share of Humber Power, the company has plants at King’s Lynn, Peterborough, Brigg in North Lincolnshire, Barry in South Wales and Roosecote in Cumbria.
Ownership of Killingholme has now changed twice since it entered commercial operation for National Power in 1994.
It was bought by NRG in 2000 for £390m (€583m) but a slump in wholesale electricity prices followed and the station was taken over by creditor banks.
Killingholme was another site believed to be targeted by CGE Power – a new electricity generation firm set up by six banks to buy power stations in debt.
Centrica said current high wholesale gas prices meant the deal will lower earnings marginally in 2004.
