Hydro to boost output south of the border - Business - News - The Independent

Hydro to boost output south of the border

Hydro-Electric, the Scottish power producer, yesterday unveiled plans for further investment in generating capacity south of the border while also holding out the prospect of a windfall payout to shareholders.

The group is negotiating to buy Norweb's 50 per cent stake in the Keadby power station in Scunthorpe in a deal which is likely to cost it around pounds 240m-pounds 250m.

Hydro-Electric already owns the other half of the station and has been selected as preferred bidder for the Norweb stake which is being disposed of by United Utilities, the group formed out of North West Water's acquisition of the regional electricity company.

The Keadby deal will increase the amount of electricity Hydro is generating for England and Wales to 2,000 megawatts. By 1999 when the Seabank gas- fired plant in Bristol is on stream, more than half of Hydro's output will be sold in England and Wales.

The Keadby acquisition, together with payment for Seabank, which is jointly owned with British Gas, will raise Hydro's gearing to 65 per cent.

But its chief executive Roger Young, nevertheless estimated that Hydro will still have the capacity to return about pounds 200m of its capital to shareholders. This is more than enough to fund a buyback of 10 per cent of its shares. Alternately, Hydro could reward shareholders with a 50p special dividend.

Mr Young said that the company would wait until the end of the financial year to decide whether to seek further investment opportunities or return cash to shareholders. Another area it is actively looking at is setting up deals to sell electricity direct to domestic customers once the market in England and Wales is opened up in 1998.

Hydro is examining so called "affinity partnerships" whereby it would supply the electricity for sale through a well known brand such as a supermarket chain or bank. "We would like to enter the domestic market and I am beginning to think this is the best means of doing so," said Mr Young.

He was speaking as Hydro unveiled flat half-year profits of pounds 61.3m, due to the abnormally low level of rainfall in the six months to the end of September. This forced Hydro to buy in extra quantities of coal to meet demand from its Scottish customers. Without the extra coal burn, profits would have been pounds 6m higher than last year's pounds 61.7m.

The strong underlying performance of the business, driven by further development of its interests south of the border, encouraged Hydro to increase its payout at the interim stage by 11 per cent to 5.3p. Previously it had set a target of growing dividends by 6 per cent in real terms.

The Keadby and Seabank power stations generate 1,400 megawatts of electricity and form the central part of Hydro's expansion plans outside Scotland.

It had planned to enter the retail power market in a big way by buying British Gas's North of England and Scottish supply business but the deal was scrapped after BG decided it could not negotiate this deal and demerge its pipeline and supply businesses at the same time.

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week