Centrica acquires option in UK's first complete...

Centrica PLC
                  

Centrica plc today announced it has acquired an option to participate in what
would be the UK's first complete clean coal power generation project for a total
of £7.15 million. The agreement, with Progressive Energy Limited, provides
Centrica with an 85 per cent interest in development company Coastal Energy
Limited, which will seek full consents for the right to construct a new clean
coal power station in Teesside, UK.

If progressed, the project would be the first to combine Integrated Gasification
Combined Cycle (IGCC) and Carbon Capture and Storage (CCS) capabilities, and
would lead to the development of a 'clean coal' power station to supply
electricity for British Gas customers, together with a pipeline and storage
project to capture the CO2 emissions.

Centrica will obtain a fixed price option to acquire the remaining shares in
Coastal Energy at the end of the two year development phase. Exercising the
option would enable Centrica to negotiate an engineering, procurement and
construction (EPC) contract, ready for full construction.

Under the same agreement, Centrica will also acquire a 55 per cent interest in
Coots Limited, a CO2 pipeline company. Subject to further financing, this would
provide a full carbon capture and storage solution to dispose of the power
station's emissions in the North Sea through agreements with existing producers.

Sam Laidlaw, Chief Executive of Centrica, said: 'This landmark agreement gives
Centrica the option to take advantage of the environmental and economic benefits
offered by emerging clean coal technology and could lead to the development of
the UK's first complete clean coal plant.'

'It offers the potential to increase the diversity of our power generation,
while underpinning our commitment to source low carbon and competitively priced
electricity for our British Gas customers.'

Centrica operates the UK's largest fleet of gas fired power stations, in
addition to its renewable generation capacity, and is also constructing an 885MW
gas fired plant at Langage, Devon. From October 2007, it will be the largest
customer of Drax power station through a 5¼ year power purchase agreement linked
to coal prices. It also has a long term tolling agreement with Spalding power
station and a portfolio of power purchase contracts.

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Note to editors:

1/ Integrated Gasification Combined Cycle (IGCC) is an emerging technology which
offers potentially lower running costs than gas-fired generation, with
comparable emissions and performance outputs. IGCC uses the latest combined
cycle technology and is environmentally superior to other types of solid fuel
generation, enabling capture of over 80% of CO2 emissions. IGCC plants can also
run on natural gas or operate 'bi-fuel'.