Centrica was right to buy a stake in British Energy, a decision that ultimately will lead to better shareholder returns
Sam Laidlaw has barely faltered since he became chief executive of Centrica in July 2006.
The share price has fared better than those of most FTSE-100 companies since then and Centrica is on the front foot again in the battle for retail customers.
It has twice been the first big operator to cut prices, sparking price wars with competitors - although Phil Bentley, managing director of British Gas, will doubtless still be heavily criticised today at the Business, Enterprise & Regulatory Reform Select Committee - and has also led the debate on the future need for security of energy supply.
Mr Laidlaw has also shown himself to have a sensitive personal touch - flying to the scene of an accident, just after Christmas two years ago, in which four Centrica workers died in a helicopter crash.
It is therefore surprising to hear that he has had a series of bruising encounters with investors, of late, over plans to buy 25 per cent of British Energy, the nuclear power generator, in partnership with EDF.
It seems some of them do not share Mr Laidlaw's view that life with EDF will be a gas, or rather, they object to the price he has agreed. Look, they say, how many distressed oil and gas companies you could have bought with that £3.1billion.
One investor is said to have been so persistent on the point in a recent meeting that Nick Luff, Centrica's finance director, had to remind them of Centrica's interests other than its stake in BE.
There are also eyebrows raised that Centrica, having completed a rights issue last year to pay for the deal, has banked the money, which, ever since, has sat on its balance sheet, diluting earnings.
There is little proof, critics say, that EDF is rushing to build the promised new reactors - and that Centrica has failed to chivvy along its new amis.
They should cut Mr Laidlaw some slack. Buying the BE stake was the right thing to do, strategically, as it diversifies Centrica's supply base and removes volatility from it - and will ultimately provide better shareholder returns. It is a long-term game and it is odd that investors supposedly wedded to the longer term apparently do not appreciate this.
Where they do have a point is that £3.1billion is not the end of Centrica's financial commitment to BE, but just the start, as once EDF begins building the new reactors, Centrica will have to stump up a quarter of the cash needed to construct them.
Each 1.6 gigawatt reactor will cost up to £5billion to build - and EDF wants four.
The share price has fared better than those of most FTSE-100 companies since then and Centrica is on the front foot again in the battle for retail customers.
It has twice been the first big operator to cut prices, sparking price wars with competitors - although Phil Bentley, managing director of British Gas, will doubtless still be heavily criticised today at the Business, Enterprise & Regulatory Reform Select Committee - and has also led the debate on the future need for security of energy supply.
Mr Laidlaw has also shown himself to have a sensitive personal touch - flying to the scene of an accident, just after Christmas two years ago, in which four Centrica workers died in a helicopter crash.
It is therefore surprising to hear that he has had a series of bruising encounters with investors, of late, over plans to buy 25 per cent of British Energy, the nuclear power generator, in partnership with EDF.
It seems some of them do not share Mr Laidlaw's view that life with EDF will be a gas, or rather, they object to the price he has agreed. Look, they say, how many distressed oil and gas companies you could have bought with that £3.1billion.
One investor is said to have been so persistent on the point in a recent meeting that Nick Luff, Centrica's finance director, had to remind them of Centrica's interests other than its stake in BE.
There are also eyebrows raised that Centrica, having completed a rights issue last year to pay for the deal, has banked the money, which, ever since, has sat on its balance sheet, diluting earnings.
There is little proof, critics say, that EDF is rushing to build the promised new reactors - and that Centrica has failed to chivvy along its new amis.
They should cut Mr Laidlaw some slack. Buying the BE stake was the right thing to do, strategically, as it diversifies Centrica's supply base and removes volatility from it - and will ultimately provide better shareholder returns. It is a long-term game and it is odd that investors supposedly wedded to the longer term apparently do not appreciate this.
Where they do have a point is that £3.1billion is not the end of Centrica's financial commitment to BE, but just the start, as once EDF begins building the new reactors, Centrica will have to stump up a quarter of the cash needed to construct them.
Each 1.6 gigawatt reactor will cost up to £5billion to build - and EDF wants four.
From The Times
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