Centrica buys Bord Gais power plant for half price

UK company gets almost 700,000 customers effectively for free

John Mullins fomer CEO Bord Gáis with then minister Micheál Martin at Whitegate, Co Cork, power plant opening in 2010.

John Mullins fomer CEO Bord Gáis with then minister Micheál Martin at Whitegate, Co Cork, power plant opening in 2010.

Wed, Mar 26, 2014, 01:00

Centrica yesterday signed a deal to buy the customer base of Bord Gáis and the Whitegate power station from the State for a total of €210 million, just half of what it cost to build the power plant in 2010.

Binding contracts were signed yesterday by the Centrica-led consortium that had agreed to pay just over €1.1 billion for Bord Gáis Energy, the group’s wind farms business and its Firmus unit in Northern Ireland.

Brookfield Renewable, a Canadian investor, will take on Bord Gáis’s portfolio of wind assets, including 320MW of operating capacity and a pipeline of up to a further 450MW, for a consideration of about €700 million.

Icon Infrastructure Partners will take on the Firmus gas and electricity business in Northern Ireland. UK-headquartered Centrica is set to acquire the power station and also Bord Gáis’s retail book of 650,000 residential gas and electricity accounts and 30,000 business accounts.

The state of the art Whitegate plant in Cork, operated by General Electric, cost €400 million to build, meaning Bord Gáis group is likely to have to take a heavy writedown in its up coming annual report.

Eddy Collier, Centrica’s managing director for Ireland, said yesterday he expected the deal to close in May or June.


Investment
He described Bord Gáis Energy as a “long-term investment” for the British energy giant, which should be free from regulatory oversight of its pricing in the gas market sometime this summer.

Mr Collier said there was no obligation on Centrica to rebrand the former state monopoly.

“You change your brand at your peril. I have seen many failures with company’s trying to change their brand. We do not have to change the Bord Gáis name,” he said.


Free power
Centrica last year announced its intention to introduce free power for its customers on Saturdays in the UK, to encourage customers to use more power when demand is lower from businesses.

Mr Collier highlighted the promotion, and said Centrica would set Bord Gáis’ power tariffs in Ireland “competitively” once it is allowed to by the regulator in the gas market. It has no such restrictions in the electricity market.

“The price of power is much too high in Ireland. We will be allowed to cut our [gas] prices once Bord Gáis gets down to 55 per cent of the market, and it is currently at 56 per cent,” he said.

Centrica also wants to invest in a gas storage project for Ireland, as well as energy efficiency measures for its home customers.

It will also target the gas and electricity home boilers market, Mr Collier said.