Direct Energy to purchase ATCO retail energy business


CALGARY, Dec. 10, 2002 — ATCO Ltd. and Canadian Utilities Limited Tuesday announced that Direct Energy, Canada’s leading provider of retail energy and home services, has agreed to purchase the retail energy businesses of ATCO Gas and ATCO Electric.

These businesses serve almost one million Alberta customers with natural gas and electricity. The transaction is contemplated to deliver long awaited competition and increased energy choices for all Albertans.

The transaction is subject to the satisfaction of certain conditions, including the receipt of required regulatory approvals and the Alberta legislature passing amendments to Alberta’s natural gas and electricity legislation that reflect the market refinements announced by the Minister of Energy in August 2002. The purchase consideration is estimated to be $128.5 million (Cdn.) at closing.

Closing will occur after all conditions and required regulatory approvals (i.e. the Alberta Energy and Utilities Board – AEUB) are satisfied, and the final value will be determined by the number of customers at that point in time. It is expected that legislative amendments will be considered in Spring 2003 with a closing date expected around the middle of 2003.

“Completion of the transaction will allow Direct Energy, a world leading energy retailer, to provide much needed competition in our province. At the same time, ATCO will continue to provide the same safe, reliable delivery of natural gas and electricity to the more than 500 Alberta communities we are privileged to serve,” said Nancy Southern, Chief Executive Officer, ATCO Group. “Direct Energy will also be contracting with ATCO I-Tek for billing and call centre services to ensure a smooth transition and minimize any customer disruption.”

Direct Energy is part of the Centrica plc family, a British-based company that has more than 44 million customer relationships worldwide.

“The agreement to acquire ATCO’s retail arm demonstrates Direct Energy’s commitment to grow and be a major retail energy provider in Alberta and in other areas of Canada,” said Deryk King, President and Chief Executive Officer of Centrica’s North American operations. “We are committed to using our financial strength, and experience in other deregulated energy markets, to ensure ATCO’s customers continue to receive high quality customer service and enjoy the benefits of competition. This agreement will allow us to utilize Centrica’s proven track record in the U.K. and other parts of North America of providing more choice, better value and high standards of customer service for customers in Alberta.”

“The more than 2000 men and women of ATCO Gas and ATCO Electric are enthused about the entrance of Direct Energy into the Alberta marketplace, since it will allow all of us to focus on our core operations, delivering natural gas and electricity to almost one million Alberta customers” added Ms. Southern. “We will continue to provide the quality infrastructure needed to meet Alberta’s growing needs, just as we have done for the past 90 years.”

“The provincial government’s proposed amendments to Alberta’s natural gas and electricity legislation will go a long way towards ensuring a competitive marketplace and level playing field in Alberta. Without these amendments, it will be impossible for Direct Energy to enter and compete fairly” said Ms. Southern. “An internationally experienced energy retailer like Direct Energy can offer the options and benefits consumers expect from deregulation. In the meantime, the ATCO Gas and ATCO Electric distribution systems will remain regulated by the AEUB so that all customers and retailers continue to have equal access.”

Following the completion of this transaction, Direct Energy will serve 2.8 million households in Canada with almost four million product relationships, making it the largest provider of retail energy services and products in the country.

In April 2001, ATCO announced it intended to seek a world calibre purchaser for its retail energy business in order to ensure its customers continue to benefit from receiving high quality and cost effective services traditionally provided by ATCO.

“As an innovative energy retailer we plan to offer a range of pricing options, products and essential home services,” said King. “We also understand the responsibilities of serving the body of customers who decide to stay with regulated rate options. Those customers will continue to experience the high levels of service to which they have become accustomed.”

Executives of both companies said customers should expect a smooth transition once the transaction is approved. Assuring minimum change during this period is a key objective of both parties.

ATCO Gas and ATCO Electric are regulated by the AEUB and are restricted from providing the wide scope of consumer choices available in many jurisdictions across North America and internationally. The retail energy business includes the supply of natural gas and electricity to consumers at regulated prices.

About Direct Energy

Direct Energy is a wholly owned subsidiary of Centrica plc, a U.K.-based supplier of energy and home services with more than 44 million customer relationships worldwide. In 2000, Centrica entered the North American market by acquiring Direct Energy, which supplies natural gas to 850,000 households, electricity to 550,000 households and home services to over 1.3 million households in Ontario and Manitoba.

About Canadian Utilities Limited and ATCO Ltd.

Canadian Utilities Limited, part of the ATCO Group of companies, is the parent company of ATCO Electric and ATCO Gas. ATCO Group is an Alberta-based corporation with a worldwide organization of companies engaged in Power Generation; Utilities; Logistics and Energy Services; Industrials and Technologies. More information about ATCO Group can be found at www.atco.com.

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