Offer for Direct Energy

Centrica PLC
6 July 2000

                              
     RECOMMENDED OFFER BY CENTRICA PLC FOR DIRECT ENERGY
                      MARKETING LIMITED
           - PAVES WAY FOR INTERNATIONAL EXPANSION

Centrica  plc  has  today agreed with the  trustees  of  the
Direct  Energy  Income Fund  to acquire its  North  American
energy  supply  business,  Direct Energy  Marketing  Limited
('Direct  Energy').   In addition, Centrica  has  agreed  to
purchase  the  assets of Direct Energy's  primary  marketing
agent, Natural Gas Wholesalers, which provides marketing and
call  centre  services to Direct Energy and  Energy  America
L.L.C.    ('Energy   America')   customers.     The    total
consideration  including assumption of debt is C$912m/£406m.
The  offer  to  acquire  Direct  Energy  has  the  unanimous
recommendation of the Direct Energy Income Fund trustees and 
the  board of directors of Direct Energy.

The offer comes as the gas and electricity supply markets in
North  America deregulate and as the pace of development  in
those  markets begins to accelerate.  The agreement marks  a
significant step in the delivery of Centrica's international
strategy  by  providing a strong base for future  growth  in
North  America, and an opportunity to apply the  skills  and
expertise  gained during the deregulation of the  UK  energy
markets.  It also creates a platform for the introduction of
other products and services as appropriate.

Direct Energy is the largest unregulated retailer of natural
gas   in  North  America,  with  approximately  820,000  gas
customers, primarily in Ontario.  In addition, it  owns  and
operates  natural gas reserves in Alberta, which provide  up
to 20% of its customer demand.

Direct Energy also has a 27.5% interest in Energy America, a
joint  venture  with Sempra Energy.  This joint  venture  is
expanding   across  the  deregulating  gas  and  electricity
markets of the United States and currently has approximately
450,000 customers.

Centrica expects the acquisition to be earnings enhancing in
2002,   before  amortisation  of  goodwill   and   any   new
investment.  It will fund the acquisition from existing cash
resources  and debt facilities.  Direct Energy's net  assets
were  C$225 million (£100 million) at 31 December  1999  and
EBITDA for 1999 was C$56 million (£24.9 million).

Under the terms of the agreement, Centrica will be retaining
the  experienced existing senior management team  of  Direct
Energy,  who  have  built  the  largest  unregulated  energy
customer base in North America.

Roy  Gardner,  Chief  Executive  of  Centrica  said:  'I  am
delighted  we have reached agreement with Direct Energy  who
share  our customer vision.  This provides us with the ideal
vehicle for rolling out our strategy into the North American
markets.   Our  expertise in building customer relationships
and  operating in deregulating markets, combined with Direct
Energy's  risk management and sales skills, will make  us  a
powerful combination.'

Gary  J  Drummond,  President  of  Direct  Energy  Marketing
Limited,   said:   'Centrica's  experience  and   investment
capability  will enhance our rapidly-growing operations  and
allow  us  to further develop our strategy in North America,
at a critical time as more markets are deregulated.'

Since  its  formation  in  1997, Centrica  has  focussed  on
developing  relationships with its traditional gas  customer
base, successfully expanding into new products and services.

These  comprise  electricity supply and home services  under
the  British Gas and Scottish Gas brands, motoring  services
under  the  AA  brand, and insurance and financial  services
under the AA and Goldfish brands.  It intends to launch  its
telecommunications service in September this year.

Subject  to  conditions, which include regulatory  and  unit
holder  approval,  it  is expected the transaction  will  be
closed during August of this year.

Chase  Securities  Inc. acted as the  financial  adviser  to
Centrica  and  Bennett Jones acted as the legal  adviser  to
Centrica.   National Bank Financial Inc. acted as  financial
adviser  to  Direct Energy and Burnet Duckworth  and  Palmer
acted as legal adviser to Direct Energy.

Contacts:

Centrica plc
www.centrica.co.uk

Investor Relations - [e-mail]
Chris Milburn - [phone]
Jo Sommers - [phone]

Media Relations - [e-mail]
Tess Kershaw - [phone]
Neville Barltrop - [phone]

Kekst & Company
(US Contact)
Tom Davies - [phone]

Notes:

1.    Unit Holders in Direct Energy will have to approve the
  transaction  by a majority of 66.6% of those  present  and
  voting (by person or proxy) at a meeting scheduled for  18
  August 2000.
2.    The transaction is conditional on clearance under  the
  Competition  Act  (Canada) and the Investment  Canada  Act
  (Canada) and the Fair Trading Act 1973 (United Kingdom).  We
  do not anticipate any serious competition issues.
3.    Across  the  whole of the US, there  are  116  million
  electricity and 61 million natural gas households.
4.    At  the beginning of 2000, about 16 million US natural
  gas customers had access to retail choice across 19 states,
  of which 2.8 million had switched.  On the electricity side,
  26  million  residential customers across  8  states  have
  recently  had  access to retail choice, with  one  million
  switching so far.
5.    In  the  six states in which Energy America  currently
  operates, there are about 21.5 million electricity and  15
  million natural gas customers.
6.    British  Gas  is  a trading name of the  two  separate
  companies that were formed from the demerger of the former
  British  Gas plc in February 1997.  Centrica plc  use  the
  brand in Great Britain.  BG Group plc use the name outside
  Great Britain.


Background:

Centrica plc

Centrica plc is a leading supplier of energy and services to
British consumers at home and on the road, employing  around
30,000 staff.

Centrica's  strategy, built on its inherited market  leading
role in the supply of gas to domestic and business customers
in  Britain, has been to develop a broad range of  essential
products and services which aim to make life easier for  its
customers.

This  comprises  energy supply and home services  under  the
British  Gas  and  Scottish Gas  brands,  motoring  services
under  the  AA  brand  and insurance and financial  services
under the AA and Goldfish brands.

For  the financial year ended 31 December 1999, Centrica plc
had  a  turnover  of  £7,217m,  with  earnings  before 
exceptionals and goodwill amortisation of £331m.   Operating
cashflow before exceptionals was £1,453m.

Energy  supply remains the key component.  National domestic
gas  competition began in 1998.  At year end  1999,  British
Gas  had  retained 73% of the domestic gas market with  more
than   14   million   gas  customers.    Since   electricity
competition  rolled  out nationally  in  May  1999,  it  has
secured three million electricity customers.

About  20  percent of Centrica's gas needs are met from  its
own  sources. It owns and operates the Morecambe gas  fields
in  the East Irish Sea and has other gas and oil reserves in
the  southern  North  Sea and Liverpool Bay.  Energy  market
price  and weather risks are managed by a specialist  energy
management team.

The  company's  activities have included the launch  of  the
successful Goldfish credit card, which currently has  around
one million cards in issue.

The  Automobile Association leads the market in UK  roadside
assistance with 9.7 million members.

Centrica is one of the largest energy traders in the UK  and
is  a  lead player in the emerging European wholesale energy
trading  market, trading gas and electricity through  Accord
Energy  and its joint venture partnership with Dutch  energy
company   Essent  -  Access  Energy.   Continental   trading
relationships  have  been  established  with  more  than  15
counterparties.


Direct Energy Marketing Limited

Direct  Energy was created in 1996 when it was  launched  on
the  Toronto  Stock  Exchange as a  unit  trust.  The  trust
structure  is  a  tax  efficient fund,  which  requires  the
distribution  of  all  earnings.  This  structure   is   now
hampering  the  growth  of  the  business  at  a  time  when
electricity as well as gas markets are opening.

Through  its  subsidiaries, Direct  Energy  is  the  largest
integrated  natural  gas wholesaler  to  residential,  small
business  and  commercial  customers  and  has  the  largest
deregulated customer base in North America.

Through  the  acquisition of Alliance  Gas  Management,  and
continued  strong  marketing  efforts,  Direct  Energy   has
consolidated its position in the Canadian gas market,  which
has  been  competitive  for  10 years.  It  is  the  leading
provider of natural gas to deregulated residential and small
business  users  in  Canada, with  820,000  customers.   The
Canadian  electricity  market will  be  opened  to  domestic
competition in 2001.

Direct  Energy's success in their home market has made  them
an  attractive partner in the US. They have a 27.5 per  cent
stake in a joint venture company called Energy America  with
Sempra.

Energy  America is a major energy marketing company  in  the
US.  They  have around 450,000 gas and electricity customers
in   six   states,   Ohio,  Michigan,   Georgia,   Maryland,
Pennsylvania and New Jersey.

Although  much of the US market is in the very early  stages
of deregulation, the states in which Energy America operates
are  leading  that deregulation process. Around  15  million
households  across  these  six  states  can  already  switch
suppliers, which is equivalent to 75 per cent of the current
competitive gas market.

This  provides a strong base for future growth  with  Direct
Energy  well  positioned to access a  total  of  44  million
households across the North East and Mid West markets.

Direct  Energy has a risk management team, which manage  the
risks   associated  with  the  procurement  of  gas  against
customer demand.  The team's objective is to directly  hedge
the  majority of the risk associated with the  sale  of  new
fixed priced contracts to the customer.

Natural  gas production assets supply approximately  20  per
cent  of  Direct Energy's total residential sale  portfolio.
These  provide  a physical hedge against natural  gas  price
movements.