Utility Week

UW 07 02 14 Uberflip

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UTILITY WEEK | 7Th - 13Th FEbrUarY 2014 | 17 Finance & Investment Fresh from controversy in its home state of Denmark, Dong Energy sold half of its stake in the London array windfarm to a Canadian pen- sion fund this week. Dong sold a 25 per cent stake in the world's largest operating offshore windfarm for £644 million and insisted the deal had been in train long before the current Goldman Sachs deal. London array is now owned by Canadian pension fund La Caisse de dépôt et placement du Québec, Eon, Masdar and Dong. Meanwhile, the Danish government faces continued public outcry over its sale of a 19 per cent stake in Dong to Goldman Sachs, the leading US investment bank. The government wants to privatise Dong and is looking to make an initial public offering in the next few years. The deal with Goldman Sachs will see an injection of private capital in preparation for the sale. Market watch stakeholders In london array This week Flood defences pay off for National Grid Investment in flood protection minimises impact of extreme weather for network operator Increased investment in flood defences paid off for National Grid in recent bad weather, according to an interim manage- ment statement issued last week. Extra flood protection installed at critical UK sites over the past few years "has helped to minimise any cost or reliability impact on National Grid's opera- tions", the company said. On its US networks, 150,000 customers were cut off as a result of the "polar vortex" ice storm in December. Despite that, National Grid said disruption and costs related to extreme weather had been "much lower" than in the previous two years. Across both patches, the company expects to invest around £3.5 billion by the end of 2013/14. As UK transmission network operator, National Grid said its expectations of electricity generation to be con- nected and disconnected in the next 12 months were "largely unchanged" since the last update. That state- ment comes amid speculation an impending capacity squeeze could be exacerbated by the closure of Eggbor- ough power station, announced in December. National Grid is developing new balancing services to manage a tightening capacity margin, which by some projections will fall as low as 3 per cent next winter. Steve Holliday, chief executive, said: "Our businesses made further progress through to the end of January toward achieving our priorities for the year. We are investing in our networks for the benefit of customers and maintaining a strong focus on efficiency." MD WaTEr Rating outlook revised to negative Fitch Ratings has revised the UK water sector's rating outlook to negative from stable, following the publication by Ofwat of new guidance on risks and rewards. According to the ratings agency, Ofwat's more flex- ible approach to setting price controls, together with its guid- ance of a 3.85 per cent vanilla weighted average cost of capital, will not allow some UK water companies to maintain credit metrics commensurate with existing ratings. In December, fellow agency Moody's also warned the sector's outlook could be downgraded to negative following Ofwat's initial suggestion that water companies had not gone far enough on cut- ting investor returns. WaTEr Upbeat forecast from United Utilities United Utilities (UU) said it was "confident of delivering a good underlying financial perfor- mance" for the year ending 31 March 2014 in its interim man- agement statement published last week. The statement, which covers the period from 1 October 2013, highlighted the continuing growth of UU's regulated capital asset base, reflecting high levels of capital investment and the impact of RPI inflation. Revenue also increased, reflecting the regulated price change for 2013/14. This rise, said UU, was only partly offset by higher depreciation and other operating costs, "as the company continues to tightly manage its cost base". However, UU's group net debt was slightly higher compared with its position on 30 Septem- ber 2013, which it said reflected expenditure on the regulatory capital investment programme and payments in relation to interest and taxation. GaS BP quits NI gas storage scheme BP has pulled out of a £400 million gas storage project in Northern Ireland. The energy company had an option to buy a majority share (50.495 per cent) in the firm developing the project, Islandmagee Storage Limited. Following a review of its European gas assets portfolio, BP Gas Marketing said it was no longer interested in exercising the option to buy the stake. The two remaining partners in the project, infrastructure company Mutual Energy and oil and gas company Infrastrata, are now seeking a new investment partner with the capital to help the project progress. Well prepared: National Grid weathers storms 30% eon 25% Canadian pension fund 20% Masdar 25% dong Construction timetable 2005: Planning applied for 2009: Construction begins 2012: Major construction complete 2013: Fully operational key statistics Area: 100km 2 Turbines: 175 Cabling: 450km offshore Capacity: 630MW

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