Centrica Plc to buy Texas-based power producer First Choice for $270 million

Centrica Plc, the largest supplier of gas to domestic customers in the UK, yesterday said that its North American subsidiary, Direct Energy, will acquire its Texas rival First Choice Power for $270 million (£175 million) in cash in order to expand its presence in the US.

First Choice Power, a wholly-owned unit of New Mexico power provider PNM Resources, supplies electricity to more than 220,000 residential and commercial customers in Texas. It was the first utility company to offer smart meter prepaid in Texas.

Centrica said that this acquisition will ''further enhance Direct Energy's position in this area, providing access to strategic prepaid partnerships that will help support future growth in this key segment of the market.''

Direct Energy, which has about 2.9 million residential customers in Texas, and the acquisition would take the total number to more than 830,000.

''This acquisition supports Direct Energy's strategy to grow and extend its North American downstream retail business, and strengthens its position as the third-largest energy retailer in Texas," said Windsor-based Centrica in a statement.

Direct Energy has operations in 46 states of the US and also Canada. The company has made acquisitions worth nearly £1 billion over the past year, including buying the natural gas assets of Canada's Suncor Energy and Gateway Energy Services.

Direct Energy president and CEO, Chris Weston said, "This acquisition is another important step towards growing scale and leadership in our North American business. First Choice Power is an established brand with a loyal customer base.''

Its addition to the Direct Energy family will significantly enlarge our business in one of the key US deregulated residential markets, providing a valuable platform for future growth," he added.