N-firm urges clearance for London bid
Thursday 12 November 1998
BE and state-owned French electricity producer EDF are each understood to have submitted offers of around pounds 2bn for London at the start of the week. Entergy, London's US owner, is thought to have given the two companies until tomorrow to return with a knock-out bid.
Some sources say EDF may just have its head in front, although its state ownership may count against it and BE made clear yesterday that it was intent on tucking a regional electricity company under its belt.
Peter Hollins, chief executive of BE, would not comment directly on any bid for London, but he said: "There are advantages in being an integrated generator, distributor and supplier of electricity, and we are looking at opportunities to achieve this."
Mr Hollins also said British Energy, the country's biggest generator with 21 per cent of the market, would be interested in buying up to 4,000 megawatts of coal-fired capacity - equivalent to two large stations - from PowerGen or National Power.
In return for being allowed to buy East Midlands Electricity, PowerGen agreed to sell two coal stations to raise competition in the generating market.
Mr Hollins said BE was in a quite different position to PowerGen. He said it would make no sense to break up the company, which owns the country's advanced gas-cooled reactors (AGRs) and the Sizewell pressurised water reactor.
BE had no market power because it did not set wholesale electricity prices, said Mr Hollins. He also said safety was paramount in running its nuclear reactors, and it was unlikely that anyone else would want to buy AGRs from it without the support mechanism and expertise that BE had.
Mr Hollins said he did not think a successful bid for London would jeopardise its supply agreement with Southern Electric, which is in the process of merging with Scottish Hydro-Electric, nor would it necessarily affect BE's ambitions to expand further into the US nuclear industry following its pounds 60m takeover of part of Three Mile Island plant through the AmerGen consortium.
He was speaking as BE exceeded analysts' expectations by unveiling a leap in interim pre-tax profits to pounds 46m from pounds 4m. The rise was mainly due to an pounds 18m retrospective credit and a pounds 9m cut in the cost of indexing its nuclear liabilities.
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