The recent announcement that Sam Laidlaw is to takeover as CEO of centrica has led some to suggest that this is an upstream expert who will start to buy the assets that Centrica should have bought five years ago when prices were lower. This sort of hindsight strategising is pretty easy and what many do not know is whether Centrica financially could afford to buy these assets then.

One thing is for certain that there is a cyclical strategising process in the UK utility sector. In the 1990's when prices were low the margin, was low and came almost exclusively from generation, suppliers made next to no money, and so supply businesses were small. After government intervention and the divestment of plant, margin switched into supply and there was a race to buy supply assets and sell generation assets. This race was led by National Power with sale of Drax and Killingholme and the acquisition of Midlands, Yorkshire and Northern. For a period the race to be vertically integrated worked well, for both declining and rising prices the so called "strategic hedge". However, the lack of investment in generation and the collapse in power prices, sorted the men from the boys, and the race was on to procure generation assets, better to be long than vertically integrated. This race was won by Scottish and Southern with their purchase of FFF (Fidlers Ferry and Ferrybridge). But eventually the dash for generation assets will be so overdone that the switch around will occur again. We are some way away from because it will take time, but then the cyclical process of strategy does take time.