Belfast Telegraph

Saturday 12 July 2014

Company Snapshot: A.E.S. (NI) Ltd

A.E.S. (NI) Ltd

AES (NI) is the company which owns and operates the 500mw Kilroot electricity generating plant.

Until late this year, AES is operating under a power purchasing agreement, agreed at the time of purchase 18 years ago, which has given the company protected revenue streams.

The agreement has given the company favourable revenue returns where, when market returns might have been lower, there was the protection of a public service obligation financed by a levy on all electricity users.

The regulator has formally notified AES that at the permitted breakpoint in 2010, the special power purchasing arrangements with AES will end. From the end of 2010, AES (NI) will be trading commercially as a generator supplying electricity to the all-island wholesale market.

A particular feature of the new market arrangement is that Kilroot will only be scheduled to generate electricity when the ‘merit order’, determined by all the generators, pushes up the marginal price to make a coal burning plant competitive with others.

In the recent past, Kilroot has experienced major week to week fluctuations in its production schedule, with overall generation levels being much lower in 2009 than in 2008 followed by an improvement in the middle of 2010.

Trading revenue at £165m was at its highest in 2008 after an unusually low figure of £107m the previous year.

AES has been a consistently profitable company. Because it was extensively financed by a debenture of almost £200m in the mid-1990s, pre-tax profits have always been much lower than operating profits. In 2010, the last repayments on the debenture have been scheduled and the cost of capital and interest payments is now lower.

In 2009, even after an impairment charge of £22m, pre-tax profits were just over £21m. This was slightly lower than in the earlier years of this decade. In the most recent year, AES paid a dividend of over £13m to its parent company as shareholders, although no dividend was paid in 2008.

In the last three years the company has reported significant expenditure on capital assets totalling well over £80m.

It has recently completed a deal to purchase the largest generator here, Premier Power, for a reported sum of £102m.

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