Philip Bowman, the new chief executive of Scottish Power, is to review the future of its US wind power and gas storage division PPM Energy in a move which could signal the $1bn plus sale of the business.
In his first interview since taking over at Scottish Power two weeks ago, Mr Bowman said that PPM would become something of an "orphan" once the sale of PacifiCorp to Warren Buffett was complete and highlighted the substantial amounts of investment that would be required if it was retained within the group. He indicated that the company's priority would be to invest in its UK operations and said Scottish Power would consider buying upstream gas production assets to counter the volatility in wholesale prices and concerns about security of supply.
Mr Bowman, a former drinks industry executive who came to Scottish Power after overseeing the sale of Allied Domecq to Pernod Ricard, stressed that he had not yet made any decisions on PPM and did not expect to get out to the US until March. The $9bn (£5bn) sale of PacifiCorp is expected to be completed by May at the latest.
PPM has 20 per cent of the rapidly growing US wind power market and could be worth $1bn-$2bn. It is developing nearly 600 megawatts of new capacity this year alone but expanding the business would require billions of dollars in extra investment.
"It is too early to say whether the business will be retained. It has an interesting niche position but it will require significant investment so the value of PPM is in the future not the short-term," he said. "The fundamental question is the logic of retaining the business given that PacifiCorp is being sold. When I go out to look at the US business that is clearly something that will be on my mind. It is a well-managed business but a bit of a orphan."
Under its previous management, led by Ian Russell, Scottish Power had plans to invest £4bn over the next five years. Mr Bowman said Scottish Power would focus again on whether to buy upstream gas assets in areas such as the North Sea. "I don't rule it out as a possibility. When you sit in the trading rooms and you see the volatility in price you say to yourself: if this is the world we are going to live in then maybe it is time to dust off the analysis."
Mr Bowman's arrival at Scottish Power, shortly after takeover talks with E.ON broke down, prompted speculation that he had been brought in to sell the company. But he rejected this, saying: "I want to dispel the idea that my role in coming here was to preside over an auction of the company. That is not the case. My task is to provide leadership and stabilise the business and the workforce. I didn't come here to be a caretaker chief executive. I came in to do what I did at Allied, which is to take a business which has been through a torrid time and build it back up."
He said he was looking at strengthening Scottish Power's management by bringing in new blood from outside to create "hybrid vigour". He also wants to beef up its corporate affairs department so that it becomes involved in the policy debate over Britain's future energy needs.
Mr Bowman expects to spend three days a week in Scotland and two in London, where he presently lives, but has not yet decided whether to move up to Glasgow. "It will depend on how things work out," he said.Reuse content