SCOTTISH & Southern Energy (SSE), the Perth-based utility, was yesterday continuing its head-to-head battle with Germany's Powergen in a bid to get hold of TXU's beleaguered UK power supply business.
If SSE is successful in its
bid for Texas-based TXU's 5.5 million customers in eastern and north-west England, the Perth-based operator would be transformed into UK's largest electricity supplier.
TXU has launched a fire sale of its European interests to stop losses on fixed price electricity contracts at its UK business - which includes the distribution companies Eastern Electricity and Norweb - dragging the parent down.
Powergen, which is owned by Dusseldorf's E.ON, and SSE are believed to be leading the bids for the TXU Energi UK retail unit, which is keen
to complete the transaction before being forced to put itself into administration.
Powergen formally bid close to (pounds) 1.3bn for the TXU unit on Friday.
But SSE yesterday declined to comment on the value of its offer. An spokesman said: ''We're talking to TXU, but that's all I will say.''
RWE, the owner of Innogy, and ScottishPower, were also believed to be in the bidding, but yesterday ScottishPower was understood to have pulled out of the auction.
Analysts have predicted a sale price of between (pounds) 1.1bn and (pounds) 1.4bn.
Ian Marchant, who was recently appointed chief executive officer of SSE, has scaled back SSE's plans for overseas expansion, but has made no secret his desire to increase his company's UK presence with acquisition of Eastern's and Norweb's 5.5 million customers.
TXU has become the latest high-profile casualty of big falls in the wholesale price of electricity following the introduction of the NETA trading system, which has led to a 40% fall in wholesale prices since 1998.
British Energy, the nuclear generator, had to be saved from collapse by a (pounds) 650m loan from the government after prices fell below the costs of production. Directors are trying to agree a restructuring deal with Department of Trade and Industry officials to stop it being wound up.
TXU has been crippled by long-term contracts to buy power from four generators, including SSE and AES Drax, signed in advance of NETA's introduction in 2001. The deals obliged the Ipswich-headquartered firm, which employs 1300 people, to buy electricity at much higher prices than it can now recover from consumers.
It emerged yesterday that TXU Europe is also likely to sell its German assets after the UK business has been dealt with.
Industry observers say Centrica, once part of the former privatised gas utility British Gas, is keen to break into the German market and seems a likely bidder for TXU's German operation.
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