Centrica North America Unit Shops For Natural Gas, Power Plants
March 30 2010 - 3:03PM
Dow Jones News
The North American unit of the U.K.'s Centrica PLC (CNA.LN) is
looking to buy power plants and natural gas production assets to
support its energy-marketing businesses in the U.S. and Canada, its
chief executive said Tuesday.
The subsidiary, Direct Energy Marketing Ltd., will focus its
asset search on power plants in Texas and the PJM Interconnection,
a 13-state power market in the eastern U.S. The company also will
look to add gas-production assets in western Canada and consider
expanding into North American shale gas.
"We are fortunate that we have a parent with a strong balance
sheet, with expertise in these areas, and an appetite to invest in
the opportunity that is obvious in North America," said Direct
Energy Chief Executive Chris Weston in prepared remarks for an
industry conference in Texas.
Direct Energy is tracking two industry trends in North America.
Several U.S. power companies are looking to pick up plants, with
companies such as Constellation Energy Group Inc. (CEG) looking for
generation to match the loads of its retail businesses. At the same
time, energy companies are expanding their production of gas from
deeply buried shale-rock formations.
"The explosion of shale gas is interesting, although there is
still much that is uncertain," Weston said in his prepared
remarks.
The unit of London-based Centrica is looking to acquire assets
to reduce exposure to commodity markets and cut the associated
capital needs. Direct Energy's retail businesses rely heavily on
buying--rather than producing--gas and electricity to supply
customers. It operates gas wells in Alberta, Canada and gas-fired
power plants in Texas.
Direct Energy's power business only produces 10% of the
electricity it supplies, while the gas business produces 20%. The
company aims to have enough supplies to meet 35% to 40% of its
power and gas needs, and is looking to make acquisitions over the
next three to five years, company spokeswoman Hillary Marshall
said.
-By Mark Peters, Dow Jones Newswires; 212-416-2457;
mark.peters@dowjones.com
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