Alarm raised on EDF bid for British Energy EDF's planned takeover of British Energy risks creating serious competition problems in the UK electricity market, rival companies and customers have warned. A deal that values British Energy's equity at about £12.5bn ($24.8bn) could be announced this week. It is backed by the UK government, which controls 35 per cent of the company and wants to get the industry moving on building more nuclear power stations. But electricity companies and industrial users have called for radical changes to protect competitors and consumers. The business and enterprise select committee makes the same call on Monday in its report on energy markets. An EDF deal would mean "essentially handing the British nuclear industry to the French government", says Dieter Helm, an energy expert at Oxford University. EDF would have a dominant position in running Britain's existing nuclear power stations and in building more. Another French company, Areva, leads a consortium that this month won the contract to run the fuel reprocessing and fabrication operations at Sellafield, north-west England. Areva also supplies pressurised reactors that EDF plans to build in the UK. Both companies are controlled by the French state. "If the ambition was to create a privatised market where we have companies competing against each other, we have taken one step in a completely different direction," Prof Helm says.
EDF's planned takeover of British Energy risks creating serious competition problems in the UK electricity market, rival companies and customers have warned.
A deal that values British Energy's equity at about £12.5bn ($24.8bn) could be announced this week. It is backed by the UK government, which controls 35 per cent of the company and wants to get the industry moving on building more nuclear power stations.
But electricity companies and industrial users have called for radical changes to protect competitors and consumers. The business and enterprise select committee makes the same call on Monday in its report on energy markets.
An EDF deal would mean "essentially handing the British nuclear industry to the French government", says Dieter Helm, an energy expert at Oxford University.
EDF would have a dominant position in running Britain's existing nuclear power stations and in building more. Another French company, Areva, leads a consortium that this month won the contract to run the fuel reprocessing and fabrication operations at Sellafield, north-west England. Areva also supplies pressurised reactors that EDF plans to build in the UK. Both companies are controlled by the French state.
"If the ambition was to create a privatised market where we have companies competing against each other, we have taken one step in a completely different direction," Prof Helm says.
A greater concern is the effect on competition in the wholesale market, where generators sell to suppliers. Keith Munday, commercial director of Bizzenergy, an independent supplier, calls the move "a very significant step in the wrong direction". The wholesale electricity market "is profoundly illiquid", he says. "It's bad now and it's going to get worse." Concerns about liquidity in the wholesale power market have been rising in recent years. A growing proportion of generation capacity has been tied up in vertically integrated companies such as EDF, Centrica, and Scottish and Southern Energy, which both generate and sell their own electricity. Independent suppliers and some customers say it is too hard for entrants to break into generation or supply. As Britain's biggest generator, with no supply business, British Energy has played a vital role in the wholesale market. If bought by EDF, it risks losing that role. "A takeover of British Energy by EDF would move a huge chunk of generation capacity into an integrated group," says Graham Paul of Electricity4Business, another independent supplier serving small and medium businesses. "It will do damage to the liquidity of the already struggling wholesale market."
The wholesale electricity market "is profoundly illiquid", he says. "It's bad now and it's going to get worse."
Concerns about liquidity in the wholesale power market have been rising in recent years.
A growing proportion of generation capacity has been tied up in vertically integrated companies such as EDF, Centrica, and Scottish and Southern Energy, which both generate and sell their own electricity.
Independent suppliers and some customers say it is too hard for entrants to break into generation or supply.
As Britain's biggest generator, with no supply business, British Energy has played a vital role in the wholesale market. If bought by EDF, it risks losing that role.
"A takeover of British Energy by EDF would move a huge chunk of generation capacity into an integrated group," says Graham Paul of Electricity4Business, another independent supplier serving small and medium businesses. "It will do damage to the liquidity of the already struggling wholesale market."
Funny how corporations have done nothing but rebuild their vertical integration since the markets were liberalised, because it's just damn simpler to manage the resources in-house than to depend on a fickle and unpredictable market to do the same. The logic of that is one fully integrated power system.
Looks like it's going to happen, wit hthe twist that it will be owned by the French State ,which is probably a good thing, as it still takes these kinds of tasks seriously.
LOL In the long run, we're all dead. John Maynard Keynes
because it's just damn simpler to manage the resources in-house than to depend on a fickle and unpredictable market to do the same.
While that may be so, the real reason is that it makes the barrier to entry even greater.
You only need to look at how ICE Futures have just taken the Deutsche Borse road and integrated clearing with the trading platform.
Nothing whatever (I don't count OFGEM, who are as useless as the FSA have been) to stop the French bleeding the Brits dry, and frankly, it's all we deserve. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
How can it be a good thing to concentrate more insecure energy in still a smaller number of hands?
Do you believe Sarkoleon and his EDF, Areva friends really take the public interest seriously? Our knowledge has surpassed our wisdom. -Charu Saxena.
Nuclear is not insecure. And if it's done right, it's very cheap. In the long run, we're all dead. John Maynard Keynes
