Prices for electricity have fallen by almost £1 billion after the UK government secured a deal with Britain’s biggest private electricity supplier to keep it from running out of power in the coming weeks.
BAE Systems said the deal with Energy Generation UK, worth about £1.8bn, would give it more time to make repairs and “build capacity” to provide enough power to meet demand.
The agreement also allows BAE to keep some of its production capacity and “facilitate a transition to a new, secure supplier” in the event of a power outage, the company said.
The company said the agreement will be completed by April 2019, and will mean that it can operate its plants and power stations until that date.
The deal will also see the company continue to pay bills for the remaining 10 years of the contracts.
“This is a huge win for BAE,” said BAE chief executive John Beddington.
“We’re really pleased to be able to help them to build capacity for the next 12 months and beyond.”
Energy Generation said the announcement would also help keep BAE systems in business and will also allow it to meet its obligations under a separate power purchase agreement with the government.
The companies deal is the latest twist in a series of deals the government has made to keep Bournemouth and Newport in the UK, with other deals in the pipeline.
Energy Generation has been the biggest energy customer of BAE since it began operations in 1996.
Beddingham said the £1billion deal was the largest ever, and the biggest of its kind in the country.
“I think the announcement was a huge success, it was really a game-changer,” he said.
“It’s a huge amount of money for BEE and for the industry in terms of saving them.”
The government also said the deals had created 1,000 jobs, including 600 in the energy and industrial sector.
The government has also secured more than £1m in tax relief and reduced the amount of energy bills BEE customers pay, which will save it about £5.6m in 2019/20.
“The government’s been really supportive of BEE, and it’s been very, very good for us,” said Energy Generation boss Andrew Smith.
“There’s been a lot of work that’s gone into making sure the deal works out for Bee.”
The deal comes as a major headache for the government as it struggles to meet the targets set out in its renewable energy target, which are to have 30% of energy coming from renewable sources by 2035.
The target is being met by an additional £1,000 per household per week from 2020, and has already been set to reach £8,500 per household in 2020/21.
However, the government is also working on a separate deal to save some of Bae’s operations.
BEE was also among the energy companies which signed up to a scheme for the National Grid to buy power from Bournborough’s local energy supplier, Powerhouse, after a contract was signed last year.
The Energy and Climate Change Secretary Amber Rudd announced the agreement last week, but Energy Generation had been under pressure to come forward with more details about the deal.
Bae said the company has made “huge progress” in building its capacity, and said the government had been “very responsive” to its concerns.
It said the new deal with the National Energy Authority would “simply allow us to continue to provide the power that BEE needs to provide our customers”.
“This investment will allow us and BEE to ensure the power we need for the long-term prosperity of Bournhamshire, Newport and Newport and South Wales,” the company added.