Utility Week

UTILITY Week 10th April 2015

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

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UTILITY WEEK | 10TH - 16TH APRIL 2015 | 17 Finance & Investment Stock watch 19.50 19.00 18.50 18.00 GDF SUEZ SHARE PRICE, 31 MARCH - 7 APRIL 31 Mar 1 Apr 2 Apr 7 Apr 19.50 19.00 18.50 18.00 GDF SUEZ SHARE PRICE, 10 MARCH - 7 APRIL 10 Mar 17 Mar 24 Mar 31 Mar 7 Apr Shares in French energy company GDF Suez bounced almost 5 per cent higher after the long Easter holiday weekend after the company announced on 1 April an overhaul of its global structure. Investors said the move could result in long-term benefits but that the implications were not yet clear. However, the share price responded immediately, climbing from around €18.50 at the start of the month to €19.40 on 7 April. This week SSE will 'reshape' generation portfolio Mothballed gas plant is due to make a come- back, but days are numbered for old coal stations SSE will react to the changing UK energy landscape by reshap- ing its asset portfolio in favour of cleaner, more flexible generation capacity while mulling over the future of 3GW of coal capacity. The big six supplier said in its latest financial report that it planned to "reshape signifi- cantly" to meet the challenging market conditions that face conventional generators as the sector decarbonises, including greater investment in gas-fired power assets and a possible shutdown of its remaining coal plant. SSE will bring its 735MW gas-fired power station at Keadby out of deep mothball, so that it has the option of returning it to service, it said. Although generation profits have been squeezed in recent years, gas plant can be profitable if signed up to supply and balancing contracts with National Grid. SSE's plans include further investment in its Peter- head gas plant, which recently clinched a contract with National Grid for voltage control services over Scottish Power's Longannet plant. SSE said it would pursue further supplemental balancing reserve (SBR) contracts with the system operator following its role on the SBR bench over the past winter. SSE will also carry out an assessment of its remaining coal-fired plants, the 1GW Ferrybridge and 2GW Fiddler. In addition, the company said it would mothball 35 per cent of the capacity of its Hornsea gas storage facility as early as 1 May this year because of the costs of operat- ing, maintaining and upgrading the facility. JA ENERGY GDF Suez outlines global restructuring Energy giant GDF Suez is set to overhaul its corporate structure from 2016, decentralising its global business units to become customer-centric. The changes are set to be in place as early as the start of next year and will divide its opera- tions into 24 business units in order to drive growth. The division of operations will follow regional boundaries, with business units for North America, Latin America, Brazil, Africa, China, Asia-Pacific, Southern Asia and Middle East, Benelux, Northern, Central & Southern Europe and the UK. In addition, eight entities will exist within France, and there will be global distinct business units steering operations in thermal generation business, exploration and production, LNG, energy management trading, Tractebel Engineering; and Gaz Transport & Technigaz. WATER UU forecasts profits rise despite costs United Utilities (UU) said in a trading update last week that it expected to post a higher full-year operating profit despite costs rising. The water company has reported that revenue for this financial year will be "slightly higher" than last year, reflecting the regulated price allowance for 2014/15. Coupled with this, there is due to be a "modest increase" in underlying operational profit as the board "continues to tightly manage our cost base" despite an increase in deprecia- tion and other cost pressures, including bad debts. There has also been a slight fall in infrastructure renewals expenditure as the company makes the transition from AMP5 to AMP6, although this still stands at £850 million for 2014/15. ELECTRICITY Hinkley Point work stalls as talks go on Construction work at Hinkley Point C has stalled, with heavy job cuts expected, as EDF Energy's talks with government over the details of its funding agreement continue. A spokesman for the company said the workforce carrying out preparatory work at Hinkley would fall from 650 to around 250 until EDF Energy and government agreed on fund- ing, which would enable a final investment decision. The UK's first new nuclear pro- ject in a generation was expected to secure the final go-ahead in March this year, but EDF said in February that outstanding issues meant a decision would only be possible aer the election. Keadby: mothballed plant back in contention

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