Centrica mines coal price deal

Centrica today announced that it has signed its first ‘coal-indexed’ power purchase agreement.

It will see International Power supplying a daily 250MW volume of peak electricity to British Gas, starting in October 2005.

The agreement, which will run for three years, is in line with Centrica’s aim of bringing greater diversity to its power portfolio by including coal indexation.

This means that the price paid for power under the contract, which will deliver around 2.34TWh, will be directly linked to international coal prices. Coal prices have been lower than gas in recent years.

Centrica Energy managing director Jake Ulrich said: “As the UK’s leading domestic electricity supplier, our British Gas business will benefit from this agreement which further diversifies the range of sources from which we procure our power.

“This is the first step in our strategy to increase the link between our input costs and coal pricing and we expect to consider other similar opportunities going forward.”