Outlook: EdF and Sweb
Saturday 12 June 1999
Naturellement, EdF has overpaid for the business. The pounds 180 that it is shelling out to buy each Sweb customer compares with the pounds 150 a head that National Power spent buying Midlands Electricity's supply arm and even that deal was thought to be expensive.
But who's counting when EdF has the French state behind it and the French taxpayer picking up the tab?
British Energy, for one, perhaps. It was outmanoeuvred and outbid by EdF in the auction for London Electricity, with a little help from the European Commission. Now it has come second best in the bidding for Sweb and will probably have to console itself by taking the Swalec supply business off poor old Hyder.
Considering the wafer-thin margins in electricity supply and the dubious credit-rating of many customers (whom the Government politely refers to as the "fuel poor"), these businesses are going for ridiculous sums.
At least National Power and British Energy have the excuse that they are buying a ready made customer billing and marketing service as well as a list of customers. EdF has no such defence in the case of Sweb because it already had London Electricity under its belt.
But the French are on a mission and will only relent when they have captured a fifth of Britain's electricity supply and generation markets. The cross- Channel interconnector, which handily seems to flow in just one direction, has given EdF a head-start in generation. Its ability to outbid anyone, even a cash machine like British Energy, when it comes to buying supply businesses should do the rest.
This time there is more likelihood of the Sweb deal being referred back to the UK from Brussels. But given that the electricity supply market is now, in theory, a competitive one, there may be less scope for the energy regulator Callum McCarthy to wring concessions out of EdF. In a perfect world, EdF would hand back to customers some of the savings it will make when the axe falls on the Sweb workforce. If nothing else, it can certainly afford it.
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