Possible shake out scenarios for the UK electricity supply industry

Prepared by Utility Consultantswww.utilityconsultants.co.nz

© Utility Consultants Ltd 2002

Disclaimer

This report containsmaterial that is speculativeand which may or may not

occur in practice

Proceeding beyond thispage is your acceptance

of the following statement

Utility Consultants,its directors and shareholdersshall not be liable for any lossor damage arising from action

or inaction based on thisreport

Introduction

This report considerstwo possible shake-out

scenarios based on ScottishPowerand S&SE being the only two

independent companies left in the industry

The report considersmarket share analyses

for each of three scenarios

The scenarios

The three scenariosare as follows…

Scenario 1ScottishPower and

S&SE amalgamate toform Company Q

Scenario 2(a)Eon acquires

ScottishPower andintegrates with

Powergen

Scenario 2(b)RWE acquires S&SEand integrates withInnogy in retaliation

to 2(a)

Present industry structure

Supply - present situation

Pow ergen (Eon)

Innogy (RWE)

EdF

S&SE

ScottishPow er

Centrica

Distribution - present situation

LE Group

Northern Electric

Scottish & Southern

ScottishPower

Western Power Distribution

Eon

Aquila Networks

United Utilities

Scenario 1

SP and S&SE merge (supply)

Powergen (Eon)

Innogy (RWE)

EdF

Company Q

Centrica

SP and S&SE merge (distribution)

LE Group

Northern Electric

Company Q

Western Power Distribution

Eon

Aquila Networks

United Utilities

Scenario 2(a)

Scenario 2(a) - supply

Powergen (Eon)

Innogy (RWE)

EdF

S&SE

Centrica

Scenario 2(a) - distribution

LE Group

Northern Electric

Scottish & Southern

Eon

Western Power Distribution

Aquila Networks

United Utilities

Scenario 2(b)

Scenario 2(b) - supply

Powergen (Eon)

Innogy (RWE)

EdF

Centrica

Scenario 2(b) - distribution

LE Group

Northern Electric

RWE

Eon

Western Power Distribution

Aquila Networks

United Utilities

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