European Energy Market

Centrica PLC
29 June 2001

June 29, 2001

Centrica enters Continental European energy market

Centrica plc has today announced the purchase of a 50 per cent share in
Luminus N.V., a newly created energy supply business in Belgium. The
transaction represents Centrica's first step into the liberalising energy
markets of Continental Europe.

The joint venture has been established with a consortium of five Flemish
municipal utilities ('intercommunales'), led by Interelectra and WVEM. The
partners expect that Luminus will be the main alternative to Electrabel in the
Belgian retail energy market.

The Flemish Government has announced a phased opening of the electricity
market, with household competition starting on 1 July, 2003. The market for
the largest electricity customers in Belgium above 100GWh has already opened.
In Flanders the market above 20GWh is due to open on 1 July, 2001, with the
above 1GWh market opening on 1 January, 2002. The opening dates for the
electricity market in the other regions of Belgium and the gas market will be
announced in due course, but are expected to follow close behind the timescale
for Flanders.

On completion, Luminus will assume management of the supply business of the
consortium members as part of the process of preparing for market opening. The
electricity and gas distribution networks serving these customers will remain
with the intercommunales. As the market opens up and the customers become
eligible for competition, the beneficial interest from the customer base will
transfer to the joint venture. The consortium has 595,000 electricity and
166,000 gas customers in the areas of Limburg, East and West Flanders, Antwerp
and Brabant (around 90 per cent of the gas users are dual fuel customers).

This joint venture will establish a strong platform from which to grow market
share throughout the rest of Belgium and cross border into the Dutch and north
west German markets.

Centrica will pay a consideration of £52 million (Euro 85 million) for its 50
per cent stake, which values the whole business at an average cost per
customer account of £135.

The agreement marks a key stage in Centrica's strategy of exporting the skills
and expertise it has gained during deregulation in the UK and creates a
platform for the provision of other products and services.

Centrica's Chief Executive, Roy Gardner, said: 'In the consortium we have
found a joint venture partner who shares our vision for developing the
competitive European market. Most importantly, this enables us to be involved
at the formative stage of market development. We aim to be a significant
player in Benelux, which is attractive due to its favourable regulatory
climate relative to the rest of Continental Europe.'

The transaction follows Centrica's acquisition of Direct Energy in Canada and
Energy America in the United States. 'I am delighted that we have now
established a presence in our two strategic growth areas of Continental Europe
and North America,' added Mr Gardner.

Energy Minister Brian Wilson today gave a warm welcome to Centrica's new joint
venture. He said: 'This deal is a strong first sign of progress in energy
market reform - in which consumers across Europe will be the winners.'

Jo Geebelen, CEO of Interelectra, commenting on behalf of the Belgian
consortium, said: 'We set out to find a joint venture partner with whom we
could seize the opportunities offered by liberalisation of the Belgian and
neighbouring markets. Centrica fits that bill perfectly. Together we aim to
establish ourselves as a major competitive force in Benelux and bring benefits
to millions of customers.'

The joint venture will have a Belgian chairman and Rob Leonard, currently a
Business Development Director at Centrica, will be appointed Managing
Director.



Enquiries

Centrica Media Relations             01753 758445

Centrica Investor Relations          01753 758114



Background Information on Luminus and the Belgian Energy Market

Luminus Retail Joint Venture

Luminus is a 50/50 JV between Centrica and a 'consortium' of five Flemish
municipal utilities in the areas of Limburg (Interelectra), West Flanders
(WVEM), Brabant (PBE), East Flanders (VEM) and Antwerp (VEM and Iveg).

The main area of the consortium, Limburg, goes right up to the Dutch border
and is close to the German Ruhr area with over 40 million people living within
a 150km radius. The HQ of the JV will be based at Hasselt in this province.

(A map showing the areas supplied by members of the consortium can be found in
this document on the Centrica web site - www.Centrica.com )

  * Consortium members are mainly involved in the distribution of
    electricity and gas and the provision of cable television services in
    their franchise areas.

  * The network assets (i.e. the gas and electricity pipe and wire networks
    and generation plant) will remain wholly owned by the members of the
    consortium and will not form part of the Luminus JV.

  * Luminus will focus on supplying energy and household related services to
    its customers and will seek to grow its customer base mainly in the
    Benelux markets.

  * Together the consortium is the second largest energy player in the
    Belgian market with 595,000 electricity customers and 166,000 gas
    customers.

  * In 2000, the consortium members distributed a total of 5.8TWh of
    electricity (12% of Belgian mass and mid market) and 23,160 TJ of gas (9%
    of Belgian mass and mid market).

  * Combined energy turnover in 1999 was EUR 700m.

Consortium       Proportion of JV electricity       Proportion of JV gas
members          customers                          customers
Interelectra                    59%                             47%
WVEM                            17%                             19%
PBE, IVEG, VEM                  24%                             34%



Competition timescales

Customers will transfer to Luminus in stages, as they become eligible for
competition.

Flemish electricity market, Competition opens 1 July 2001
over 20GWh
Flemish electricity market  Competition due 1 January 2002
over 1GWh
Flemish electricity market  Competition due 1 January 2003
over 56KVA
Remaining Flemish           Competition due 1 July 2003
electricity customers
Flemish gas market          Expected to open in stages, approximately one year
                            after electricity market
Wallonia                    Timescale not yet set, but expected to follow
                            closely on Flemish timescales



The Belgian Energy Market

Electricity

CPTE, owned by Electrabel (91.5%) and SPE (8.5%), generates around 96% of
electricity consumed in Belgium. Auto generators and imports (of which about
two thirds is from France) account for the rest. The high voltage grid is also
owned by CPTE, and is operated by Electrabel.

Municipalities have a legal monopoly over electricity distribution and the
distribution networks are owned and operated by 'Regies' and
'Intercommunales'. There are nine independent municipally owned utilities
'intercommunales pures', nineteen utiliIities partially owned by Electrabel,
'intercommunales mixtes', and eight 'regies', run directly by the relevant
local authority.

There are approximately 5 million electricity customers in Belgium consuming a
total of 78.7TWh. Belgian customers use per capita slightly more electricity
than in the UK at around 8,000 kWh pa. compared with the UK at around 6,500
kWh pa.


Belgian electricity prices are among the highest in Europe. The average
residential electricity price (excluding taxes) is around 7.5p/kWh i.e. around
22% higher than the European average.


Electricity prices to industrial customers (net of taxes) in Belgium are on
average 3.5p/KWh for loads greater than 24GWh pa; 12% higher than the EU
average.


Gas

There are approximately 2.5million gas customers in Belgium, supplied entirely
from imports - Netherlands (28%), Norway (29%), Algeria (24%) and the spot
market (19%).

Gas consumption in Belgium increased by 87% between 1988 and 2000, to
approximately 621,700 TJ. This strong demand for gas has been driven primarily
by demand from electricity generators, which account for 42% of the total
increase in gas consumption. Over the same period residential customers'
consumption increased by 40.8% and industrial customers' consumption increased
by 49.7%. Historically, the gas distribution network in the province of
Limburg has been rather limited in comparison with other Flemish provinces. In
1996 only 25% of households in Limburg were connected to a gas distribution
system, compared with between 50% and 60% for some of the provinces. Higher
than average growth is expected in future years.

Gas prices in Belgium are broadly in line with the EU average.