French Power Play in British Distribution Networks

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The following is an advisory by Industrialinfo.com (Industrial Information Resources, Inc.; Houston Texas). The East Anglian 89,000km power distribution network, which is Britain's largest regional network, is being sold by TXU, the US energy group which is focusing on its electricity retailing interests in the UK and can use the cash to expand its European interests.

Front runner in the competition to buy the $2.1billion East Anglian is Electricite de France (EdF), which already has a joint company with TXU managing local networks in the eastern UK. EdF also sells power and gas to three million customers in London and southwest England and could buy TXU's share of the management company to gain control of East Anglian, which has seven million customers. EdF is also expected to bid for Seeboard, the southeast England electricity supplier when and if its current US owner AEP puts it on the market for $2 billion in 2002. EdF bought SWEB, another southwest England supplier for $330 million in 1999.

A counter bid for East Anglian may come from GE Capital and a number of other financially based companies and institutions. The push that EdF is making into European markets is under criticism from the British, Germans, and Spanish who complain that France is slow to open its domestic energy markets enough to allow the entry of foreign companies. While major slices of the British industry are being bought by French and German firms, Britain objects that both countries are slow to open up their own markets. The European Commission is looking into restrictive policies by member states and competition issues which could arise from deals currently on the table.