The long-running saga of who owns the UK's energy infrastructure continues, as E.on (Germany) sells its electricity distribution grids in the Midlands to PPL (USA). This follows the sale by EDF (France) of its own UK networks to CKI (Hong Kong). A number of C@W readers don't like this kind of free trade in key assets, but then again, others of us think it's just fine. It's been going on since (from memory) 1995, when the first of the privatised Regional Electricity Companies to be gobbled up - SWEB - was taken by Southern Co (USA). I daresay it will continue for years to come.
To me the more interesting aspect is what it betokens at this juncture. And the answer seems to be: the big Euro-oligopolists - EDF, E.on, RWE et al - are having a lean time of it, rising electricity prices notwithstanding. We predicted this back in Jan 2009: they are beset from all sides by the recessionary downturn, oil-indexed gas contracts in a soft gas market, and various other factors summarised well by E.on here.
Our old friend Mr W pointed me at EDF's annual report last week, commenting how thin their profits seem to be on nuclear generation, and how hesitant they sound on future nuke investments.
So - little wonder they need to sell assets of the type that get a decent price when interest rates are low. As well as shifting their UK distribution assets, they have also offloaded half the French grid to another state-owned entity in order to improve their debt ratio - a neat froggie sleight-of-hand that has their private-sector rivals hopping.
But let's extend this thought process a little further, recalling that Crapper Huhne is looking to these guys to find £200 billion (sic) for power & gas infrastructure investments over the coming years, in pursuit of his mad 'de-carbonisation'. Now we know he's ready & willing to force up electricity prices significantly in order to subsidise them on a lavish scale.
Would it be paranoid to suggest they are clearing their balance-sheets to be able to participate as much as possible in this bonanza ? They are uniquely well-suited to be beneficiaries, as Huhne's schemes are of byzantine complexity which very few companies - in fact, only the incumbents - can really get to grips with.
This would be a neat twist of fate. For years EDF has been exporting nuclear electricity to us and over-paying for our assets, all subidised by the French. Now Huhne is gearing up to repay the compliment. That kind of trade we can do without.