Centrica buys power plants

August 24, 2001 Posted: 1018 GMT

LONDON (CNN) -- British gas and home services group Centrica said it has bought two UK power stations as part of its strategy to build up its electricity business.

Centrica said its purchase of the two plants in East Anglia, eastern England, for £174 million ($250 million) from U.S. utility TXU Corp. (TXU: Research, Estimates) would provide a combined generating capacity of 705 megawatts.

The deal will see Centrica (CNA) acquire operating leases of about 20 years on the plants and take over their operation and management.

The deal is subject to regulatory approval from the UK Office of Fair Trading and is expected to close by the end of September.

Centrica's electricity business currently serves 4.5 million customers. A company spokeswoman told Reuters news agency the latest acquisitions meant the group could meet demand for 30 percent of those customers from its own generating capacity.

The acquisitions follow Centrica's purchase in May of a 60 percent stake in UK utility Humber Power Ltd., which runs a 1,260 MW power station in northern England.

Centrica Chief Executive Roy Gardner, said in a statement: "The transaction reinforces our commitment to grow our electricity business and to continue offering customers a competitive package."

Shares in Centrica rose 1.1 percent to 228 pence in London in late morning trading. The stock has underperformed the FTSE gas distribution sector by about seven percent since the beginning of the year.

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