Centrica to build major new UK power plant

LONDON, June 16 (Reuters) Britain's biggest gas and electricity supplier, Centrica Plc, is pressing ahead with plans to build the country's first major power station for five years, it said on Friday.

Centrica, the owner of the British Gas brand and a potential takeover target of Russia's Gazprom, also said it was trading in line with guidance previously given as it put aside 400 million pounds (9 million) for the new gas-fired facility at Langage, near Plymouth in south-west England.

Centrica hopes the plant will help plug the gap in its power supply needs and cut exposure to volatile wholesale energy markets which have helped drive customer bills to record highs.

''Faced with a volatile wholesale energy market and a predicted reduction of power generation sources in the UK over the coming years, this major investment signals Centrica's commitment to secure the future energy needs for our British Gas customers,'' Chief Executive Roy Gardner said.

The firm blamed a fresh surge in wholesale energy costs for its 22 percent hike in gas and electricity prices on March 1, Centrica's fourth increase since January 2004. And it recently hinted that another rise might be on the way.

Centrica shares rose 1 percent to 274 3/4 pence by 1152 GMT, giving the business a market value of almost 10 billion pounds.

In a separate statement on Friday, French engineering firm Alstom said it had won a contract worth more than 400 million euros (7 million) to develop Centrica's new combined cycle gas turbine (CCGT) plant.

That boosted Alstom's shares 2.4 percent to 67.55 euros in Paris.

GAZPROM Centrica has already said it was in talks with Gazprom -- but only about the possibility of securing access to the Russian company's huge energy resources, possibly by way of a long-term supply contract.

Centrica is keen to meet up to three-quarters of demand for its energy from its own sources rather than the one-third it was used to in the past.

The company said that despite the Langage plans, it would stay on the lookout for other deals to boost its reserves.

The Langage plant, first proposed more than eight years ago, is due to start operating commercially during winter 2008/09 with a capability of supplying up to 11 percent of the firm's peak residential electricity demand, Centrica said in a statement.

Centrica said in April it had agreed a five-year power supply deal with UK coal-fired power plant owner Drax Group Plc to give it access to around 600 megawatts of power or enough to meet 8 percent of its forecast peak residential electricity demand.

Centrica said on Friday it was trading in line with guidance already given.

It warned last month of lower 2006 earnings than expected, due to rising wholesale energy costs and outages at its UK gas storage facility Rough, and this month it said a bigger tax bill was likely to shave around 1 pence off earnings.

REUTERS CS KP1809