International Power to buy Rugeley plant

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The Independent Online

International Power surprised the markets yesterday by announcing the £200m acquisition of a UK coal-fired power station.

The company, which was demerged last year from Innogy, the UK-based arm of the former National Power, is buying the 1,000 megawatt Rugeley station in the Midlands from TXU Europe. International Power, as its name suggests, was demerged in order to concentrate on overseas markets and has targeted two particular countries for expansion ­ the US and Italy.

However, Peter Giller, International Power's chief executive, maintained the Rugeley deal would fit into the group's broader plan of growing its European regional business. International Power has one other UK station ­ a 500 megawatt gas-fired plant on Deeside ­ and said the addition of a second coal-fired facility would give it a better balance when bidding for contracts under the UK's new electricity trading arrangements.

International Power has set itself the goal of almost tripling its generating portfolio from 8,350 megawatts now to 20,000 megawatts over the next two to three years and growing its earnings by between 20 and 25 per cent a year. It is planning to build up to 5,000 megawatts of new capacity in the US and 3,000-4,000 megawatts in Italy.

Under a "tolling agreement" TXU will provide coal for the Rugeley station and take all its output for the next four years. There will be no job losses. The deal continues TXU's strategy of getting out of UK electricity generation to concentrate on its UK electricity retail business, power trading and expansion into mainland Europe.