Utility Week

UTILITY Week 20th March 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 20TH - 26TH MARCH 2015 | 23 Finance & Investment Stock watch 250 245 240 235 CENTRICA SHARE PRICE, 12 - 17 MARCH 12 Mar 13 Mar 16 Mar 17 Mar 300 280 260 240 220 CENTRICA SHARE PRICE, 17 FEBRUARY - 17 MARCH 24 Feb 3 Mar 10 Mar British Gas parent Centrica saw its share price plunge almost 2.5 per cent to 236.1 pence within hours of the market opening on 13 March, after news that Labour intends to give Ofgem the power to force tariff cuts. However, the share price bounced back from a low of 235.1 pence on Monday morning to above 245 pence on Tuesday morning on expectations that Wednesday's Budget will include offshore tax breaks. This week Eon to detail business split plans in Q2 Eon chief executive says plans to create a spin- off energy company are 'making good progress' Eon is set to reveal details of its planned business split in the second quarter of this year, as earnings from the German energy giant continue to fall. Eon chief executive Johannes Teyssen says in the company's latest financial report that plans to create a spin-off energy com- pany to divide Eon's focus on innovative and conventional technologies are "making good progress", and promised further details within the next few months. "We're taking a proactive approach and laying the groundwork for Eon to seize the many opportunities of the new energy world and for the new company to play a key role in the conventional energy world. The prepara- tions are making good progress. We intend to announce initial details about the two companies in the second quarter," Teyssen said. In its 2014 financial report, Eon said "strategic renewal" will be the company's dominant theme in the year to come, but warned that earnings are expected to fall further as difficult market conditions persist. Eon said it expects its 2015 earnings to be between €7 billion and €7.6 billion, down from 2014 earnings of €8.3 billion, which were slightly lower than consensus expectations of €8.4 billion. The 2014 figures stand almost 10 per cent below 2013 earnings of €9.1 billion. European utilities have come under persistent pres- sure over recent years as the deployment of subsidised renewable technologies undermines the profitability of conventional thermal generation. JA ENERGY Good Energy profits hit by mild weather Renewable energy firm Good Energy has reported profit before tax for 2014 at 33 per cent below the level seen the previous year due to lower temperature-led customer demand. The generator and supplier said on Tuesday that its profit was just £2.2 million compared with £3.3 million in 2013, despite revenue growing 43 per cent year on year as its customer base grew 34 per cent. "In common with the rest of the market, challenging trading conditions resulting from the warmest year since records began led to reduced energy use by consumers, impacting on profit before tax for the full year," the company said. But chief executive Juliet Davenport said the year had still been one of "good progress" towards the company's strategic objectives. "We have delivered strong customer growth, contin- ued to invest in customer service excellence and in our growing generation portfolio, and have secured the funding required for the next phase of our growth strategy," she said. The company's total owned generation output increased 55 per cent to 42GWh, while its customer base grew by 30 per cent for electricity supply and 67 per cent for gas supply. "As such, we are confident that we are well positioned to respond and adapt to further changes in the marketplace and to continue to deliver growth," Davenport added. ENERGY Centrica shares fall with Labour pledge The share price of the UK's largest energy utility took a hit last Friday aer Labour leader Ed Miliband ratcheted up the political risk faced by utilities by pledging to cut prices if the party comes to power. British Gas parent company Centrica saw its share price fall almost 2.5 per cent to 236.1 pence within hours of the market open- ing, aer news that the Labour Party intends to give Ofgem the power to force tariff price cuts to reflect the wholesale market. Energy prices have become an increasingly politicised issue since September 2013, when the Labour leader first proposed to intervene in the sector by freez- ing tariff rates. Since then, Cen- trica's share price has slid 41 per cent. Some estimates show the UK energy sector may already have lost £3 billion of investment as a result of the political risk created by the Labour policy. Centrica is most exposed with 15 million customers, but SSE – which has more than 8.5 million – also saw its share price slump, from 1,492p to 1,459p. Divide and rule: Eon plans spin-off company 17 Mar

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