British energy giant Centrica plc continued its shopping spree in North America Tuesday, announcing it will pay C$128.5 million to purchase the natural gas and power businesses of Atco Ltd., which serves one million Alberta customers.

Direct Energy, a Centrica unit, agreed to purchase the retail energy businesses of Atco Group’s Canadian Utilities Ltd. retail businesses Atco Gas and Atco Electric in a transaction expected to close by the middle of 2003. The purchase would crown Direct Energy as the largest retail energy services provider in Canada, boosting its Canadian clientele to almost 2.8 million.

Worldwide, Centrica serves more than 44 million customers, and has made significant inroads throughout North America in the past year. With its purchase of Calgary-based Direct Energy in 2000, Centrica supplies natural gas to about 850,000, power to 550,000 and home services to 1.3 million in Ontario and Manitoba (see Daily GPI, Aug. 22, 2000).

Centrica became the largest retail marketer in North America last spring following its purchases of two substantial retail businesses in Canada and the United States. In May, Centrica North America completed a C$1 billion purchase of Enbridge Services Inc. from Enbridge Inc., doubling its Canadian base and bringing its entire North American customer count to 3.7 million (see Daily GPI, May 8). And in April, Centrica North America purchased American Electric Power’s 800,000-plus Texas retail customers. It had first planned to buy U.S.-based NewPower, but that transaction would have created liability problems involving Enron Corp.’s bankruptcy (see Daily GPI, Feb. 21, April 1).

Nancy Southern, who was named Atco Group’s CEO a month ago, said Atco would continue to provide gas and power delivery to more than 500 Alberta communities, and noted that Direct Energy would provide “much needed competition to our province.”

Atco Gas and Atco Electric are regulated by the Alberta Energy Utilities Board, and thus are restricted from providing the consumer choices available in many jurisdictions across North America and internationally. Atco had announced in 2001 that it wanted to sell its retail energy services unit to focus on its regulated businesses. The gas and power units combined employ about 2,000, and they are expected to become Direct Energy employees.

Deryk King, CEO of Centrica’s North American operations, said Direct Energy would offer a “range of pricing options, products and essential home services, and added that “assuring minimum change during this period is a key objective of both parties.” To ensure a smooth transition, Direct Energy will contract with Atco’s I-Tek for billing and call center services.

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