Power sector faces upheaval in store for power
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Your support makes all the difference.Further upheaval in the troubled electricity retailing sector is expected today with the announcement that Homepower, the joint venture between East Midlands Electricity and Yorkshire, is to be sold for a minimal sum.
The two privatised utilities have been looking for a way out of the cut- throat sector for some time. Nigel Rudd, the new chairman of East Midlands Electricity, said the retailing division was the next candidate for rationalisation.
Candidates to buy the chain include Dixons, Kingfisher, or a management group which purchased the retail operations of London Electricity in 1993.
That deal was led by Clive Vlotman, London Electricty's head of retail operations, who paid £6m for 66 of London's Powerhouse stores. Homepower has 124 outlets of which 10 are out-of-town superstores. The chain made a loss of £2.8m last year on sales of £100m. In 1993 losses reached nearly £10m.
More rationalisation in the sector is expected in the next few weeks with a store closure programme at Powerhouse, the joint venture between three electricity companies, Eastern, Southern and Midlands.
Tony Shiret, stores analyst at brokers BZW, said: "All the electricity companies wanted to get through Christmas to get the maximum receipts, but now the tough decisions are being made."
The withdrawal from the market by some of the utilities follows complaints by Dixons last month that the electricity companies were subsidising their retail operations by up to £250m a year between them.
"The regional electricity companies are making no profits or minus profits," Stanley Kalms, Dixons chairman, said.
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