Region's power network goes up for sale

ENERGY group EDF today confirmed that it is planning to sell the electricity distribution network for the East of England, which it has owned since 2001.

ENERGY group EDF today confirmed that it is planning to sell the electricity distribution network for the East of England, which it has owned since 2001.

French-owned EDF said it was “initiating a process to evaluate ownership options” for its entire electricity distribution business in the UK, which also includes the networks covering the London and South-East regions.

A sale of the network has been the subject of speculation since February when EDF said it planned to reduce its net debt by at least five billion euros (about �4.5billion at current exchange rates) by the end of 2010.

This announcement came less than a month after EDF completed a �12billion deal to take control of UK nuclear generator British Energy, which is planning to build a new generation of nuclear plants including two at Sizewell in Suffolk.

“The evaluation process logically follows the acquisition of British Energy announced in 2008 which has resulted in a better balance between EDF Energy's generation and supply businesses,” said the group in a statement today.

“By improving the capacity to meet the requirements of UK customers, EDF Energy has developed a strong position to grow its retail business.”

Most Read

Group chairman and chief executive Pierre Gadonneix said: “The process to evaluate ownership options for our UK electricity distribution networks is part of the announced asset divestment programme, aiming to reduce our net financial debt by at least €5 billion.

“It is also part of our development strategy in the United Kingdom, which is a key market in Europe for the group. This process follows British Energy's acquisition which facilitates EDF's plans to develop new nuclear power in the UK and significantly strengthens our position as a UK energy player.”

Vincent de Rivaz, chief executive of the EDF Energy, the group's UK business, added: “As a responsible company, EDF Energy will continue the dialogue with its employees and other key stakeholders throughout this evaluation process.

“This unique combination of three regulated networks covers a key region vital to the UK economy. It has a highly experienced and skilled workforce which has a strong track record of delivery and is well placed for growth.”

EDF financial advisors for the evaluation are Barclays Capital and Deutsche Bank AG's London branch. Additional support will be provided by BNP Paribas.

EDF is reportedly seeking a price of more than �4billion for the UK networks business, which involves 100,000 miles of lines connecting eight million homes across the three regions, although the combination of the recession and the reduced flow of capital from lenders is depressing the value of major infrastructure assets.

A number of companies have been mooted as potential buyers including the national electricity network owner National Grid, rival utility company Scottish & Southern, investment group GIP, Morgan Stanley Infrastructure, the Abu Dhabi Investment Authority, Cheung Kong Infrastructure (owned by Li Ka-shing, reputedly Asia's richest man) and a consortium of three Canadian pension funds.

The East of England distribution network, originally part of the privatisation of Eastern Electricity in 1990, was separated from the retail business in 2001 when it was sold by the American group TXU to London Electricity, which had been acquired by EDF three years earlier.

The UK operation was rebranded under the EDF banner in 2002 when the South-East regional network was added to the business.

The former Eastern Electricity retail business is now part of German-owned E.ON, which acquired it from TXU in 2002. E.ON closed the former Eastern headquarters at Wherstead Park, Ipswich, last year and the site has since been acquired by the East of England Co-operative Society as its new HQ.