Hanson making power play

Hanson, the industrial conglomerate, will emerge as one of the United Kingdom's largest electricity generators if it succeeds in its bid to buy three power plants from National Power, writes Mary Fagan.

The group, which is entering the electricity supply and distribution market through the acquisition of Eastern Electricity, has already agreed to pay pounds 400m to lease two generating stations from PowerGen.

Industry analysts estimate that Hanson could have 12 per cent of the market in England and Wales within a few years, compared with a projected 16 or 17 per cent for PowerGen.

National Power's share is expected to drop to about 23 per cent or less, from 34 per cent last year.

The nuclear power industry, part of which is soon to be privatised as British Energy, could take the lead with about 25 per cent.

National Power said yesterday that Eastern, along with Enron and Applied Energy Services of the United States, are being invited to submit final bids for the pounds 1bn sale of the plants at West Burton in Nottinghamshire, Ironbridge in Shropshire and Rugeley in Staffordshire.

The company said it is willing to sell these plants singly, but that all the contenders have shown interest in acquiring all three.

The power stations have a combined capacity of 4,000 megawatts - about 20 per cent of National Power's total capacity.

But they make up more than one-quarter of the company's output as they run for 60 to 70 per cent of the time, while some power stations run only when needed to meet peak demand.

Both National Power and PowerGen have been under pressure from the electricity industry's regulator, Professor Stephen Littlechild, to dispose of plant in order to increase competition in the generating market.

Professor Littlechild had given both companies until the end of this year to help them meet his concerns, or risk being referred to the Monopolies and Mergers Commission.

National Power said most of the payment of pounds 1bn or more would be split between a large initial consideration with more later related to sales of electricity from the plants.

The disposal is expected to be agreed by the end of December.