One of Scotland’s most strategic corporations is being auctioned off to a foreign company. The $22 billion (Ǥ11.6 billion) takeover of Scottish Power by Spanish energy corporation Iberdrola will give the Spanish conquistador 5.2 million customers and 6,200 megawatts of power-generation capacity within the UK. Iberdrola will then control 10 percent of the energy market in the UK, making it the fifth-largest energy provider for the British Isles.
Scottish Power is one of the last Scottish-owned and -headquartered corporations of any significance left in Scotland, says member of Scottish Parliament and economic affairs spokesman Jim Mather. “Scottish Power is one of only 19 companies employing more than 5,000 people with their headquarters in Scotland, and is the biggest industrial company in the country,” he said (Sunday Herald, Nov. 12, 2006).
Scottish Power is an economic jewel—with a well-diversified asset mix, including natural gas, coal and wind power, located in both the U.S. and the UK. At a time of high and rising natural gas prices, this diversification is key: Scottish Power has been able to react to changing market conditions and generate a greater proportion of its energy from coal, which is much less expensive than natural gas. This gives an energy company a huge advantage, especially one in the British Isles, where demand drove natural gas inventories to near record-low levels this past year.
Scottish Power’s wind energy also becomes a lucrative alternative, as it has one of the largest wind power generators in the U.S. and UK. This, in fact, could be one of the driving factors behind the Iberdrola takeover. The combined company would be the world’s largest producer of electricity from wind.
The sale of Scottish Power is just one example in a hoard of foreign takeovers hitting Britain’s energy utilities. German energy giant rwe Power owns Britain’s third-largest energy supplier, NPower, which supplies electricity and gas to approximately 6 million customers. Another German energy giant, E.On, owns even more of Britain’s energy distribution system. Through its subsidiary Powergen, E.On provides power and gas to 9 million British customers, making it Britain’s second-largest electricity and gas provider. edf Energy, the French state-owned energy giant, is Britain’s fifth-largest electricity and gas provider. If the rumors are correct, Russia’s state-owned gas giant Gazprom may be seeking to take over Centrica, Britain’s largest gas utility, supplying gas to 13 million homes.
Sadly, few question the wisdom of putting Britain’s heat and electricity in the hands of foreign corporations, even when so many strategic industries in the UK have already been snapped up.