Centrica Plans Power Plant Acquisitions to Double U.S. Profits

Centrica Plc, the U.K.’s biggest energy supplier, plans to buy power generation and retail assets in the U.S. to double profits from North America by 2014.

“Acquisitions are one of the ways for us to meet our targets for the U.S. business,” Chris Weston, managing director of Centrica’s North America business, said in an interview in London today. “We’re looking at becoming more vertically integrated through more power production. Our preference is for gas-fired power plants in the northeast.”

Centrica’s U.S. unit, Direct Energy, is looking to boost the percentage of energy it produces to supply customers, Weston said. Any power Centrica doesn’t produce it buys from other suppliers, leaving it exposed to changes in both electricity and gas prices. Ideally, the utility would control gas and power generation assets covering as much as 40 percent of customer’s needs, he said.

Since 2000, Windsor, England-based Centrica has made as many as 25 acquisitions in North America, including the $183 million purchase of Clockwork Home Services Ltd. in June last year and a C$375 million ($359 million) deal in August to buy Suncor Energy Inc.’s natural gas assets in Alberta. The division owns 3 combined-cycle natural gas plants in Texas, 4,000 gas wells in Canada, as well as supply and energy services units.

The Direct Energy division, which serves about 6 million customers in Texas, Canada and along the east coast, accounts for about 10 percent of Centrica’s earnings, Weston said. Centrica wants to boost Direct Energy sales to $700 million by 2014, from $380 million, he said.

“The U.S. market dwarfs the U.K.,” Weston said, adding that American homes use about three times as much energy as British homes on average. The size of the whole U.K. energy market at about 80,000 megawatts is equivalent to that of Texas, he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE