Author: By Tim Webb
Mistake number 1: “No, I have ‘Mr Diversity’ written here,” he adds. Mistake No 2: do not think de Rivaz, whose EDF Energy owns London Electricity and Seeboard and a host of other UK electricity companies, is a typical chief executive (see mistake No 1).
Mistake No 3: do not assume EDF Energy is all about making money. “No, no, no,” he says, shaking his head. “We are not in that [profit at all costs] camp at all.” Whether an investor in the state-controlled EDF Group, which floated 15 per cent of its shares in November – or, for that matter, the hard-up French government – would agree is another matter.
Whatever their views, de Rivaz says we should all be consuming less energy, even if that means his company, which supplies five million gas and electricity customers in the UK, would make less money. “Our kids will not forget if we produce a planet they can’t live in,” he says. “I have three boys.”
Fortunately for him, and the shareholders, EDF Group is also generating plenty of profits. Last week, it reported that income for 2005 had doubled to ?3.2bn (£2.2bn), with the UK contributing ?440m.
But all is not well chez de Rivaz. While claiming to have a lot of respect for his rivals, he has a few “passionate” words for Sir Roy Gardner, his opposite number at Centrica, owner of British Gas. And although he is too polite to say so directly, he also suggests that Neelie Kroes, the EU Competition Commissioner, should mind her own business.
Earlier this month, Kroes published her report on the European energy market, and it did not make pleasant reading for EDF Group and other industry giants like E.ON of Germany and Enel of Italy (there are no British energy giants).
Kroes said the market was dominated by a handful of “vertically integrated” players – companies that generate their own electricity or have access to gas, own the networks to distribute it and sell to customers. As a result, she said, competition das been restricted and consumers pay more than they should.
De Rivaz, ever the gentleman, thinks Kroes is “very clever and smart”. But he insists that only the giants she attacked are able to provide the “billions and billions and billions” of investment needed to shore up Europe’s fragile security of supply, exposed last month when Russia turned off the gas taps.
“I think the wrong battle is the battle where we forget about security, the need for huge investment and climate change … not a fragmented approach.” So she is wrong? Another Gallic shrug. “We are telling her, all of us, that in every place local players have no future. In Europe, we need strong global players. Fighting against vertical integration is not the right battle.”
He says E.ON’s shock ?29.1bn (£19.8bn) takeover bid for Spain’s Endesa, announced last week, is a natural part of this consolidation. Best leave it to the experts, not the Brussels bureaucrats, he adds. “If we think our problem will be fixed by Brussels, and not by us, we will be wrong.”
Then de Rivaz trains his sights on Sir Roy. The chief executive of Centrica has backed Kroes, saying British consumers are victims of “the closed shop of Europe’s energy markets”. As if to underline his point, Centrica recently announced rises in electricity and gas bills of a whopping 22 per cent – a record jump – and blamed soaring wholesale gas prices.
But de Rivaz says it is because of Centrica’s lack of vertical integration – it has to buy most of the gas and electricity it supplies from expensive wholesale markets – that customers are facing such huge hikes. “Centrica is lecturing Europe saying: ‘All my problems are not my fault; I am naming and shaming the Continent for all my problems.’ It is believing its own propaganda, which is very dangerous. Its problem is to have been so sure vertical integration wasn’t a good thing that it is asset-light. It should look at that rather than accuse the rest of the world.”
EDF Energy has just announced rises in electricity prices of 4.7 per cent and gas by 14.7 per cent from next month. But de Rivaz says his company is more integrated – it generates most of the electricity it supplies from its own power stations – so his customers are more protected from the excesses of the wholesale markets.
He goes on to mention “Catch 22”, which turns out to be the slogan for his company’s advertising campaign. This refers to the Centrica price rise and claims customers could save more than £140 by switching to EDF Energy. “And Centrica has just announced a 22 per cent increase in its dividend, ha ha!” he adds, all smiles.
So what is the solution to the energy crisis? De Rivaz says that, in the UK, “we have been too addicted to volatility and short- termism” and the focus needs to be on sustainability and long-term policies.
Does that mean the answer is nuclear power? The UK already gets around a fifth of its electricity from nukes, so he cannot see what all the fuss is about. “The big decision will not be to go to nuclear, but if we decide not to. We should calm down. We are already nuclear, so what’s the difference?”
Before the private sector can build new reactors to replace those being decommissioned, the UK’s planning and licensing regime needs to be overhauled, he says. And then would EDF Energy want to build and run them? “Mr Diversity” smiles, insists he is “humble” and adds: “No one denies we have done a fantastic job in this field.
BORN: 4 October 1953.
Graduated as an engineer from the Ecole Nationale Supérieure d’Hydraulique de Grenoble.
1977: joined EDF. Later built dams in Africa, Guyana and New Caledonia.
1985-91: managed the group’s Far East division, focusing on China and on the development of nuclear, thermal and hydro-electric generation and transmission projects.
1991-94: managing director of EDF’s hydro power department.
1995-98: deputy head of EDF’s international division.
1999: deputy chief financial officer.
2000: head of strategy and finance.
2002 to now: chief executive of London Electricity Group (since renamed EDF Energy).
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