Centrica North America Unit Shops For Natural Gas, Power Plants

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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