Centrica's steady strategy.(EDITORIAL)

Centrica and EDF are natural bedfellows. Despite lengthy attempts to separate power producers from distributors, the two processes essentially remain interlinked. At EDF, there is no pretence about this. French users have long paid less for their power.

With Centrica, the links are less obvious. But the company's recent stake-building in the new British Energy and Venture special production company helps to boost and diversify the sources of power that the company can tap into, nuclear and North Sea oil and gas respectively.

After last month's agreement, Centrica will have a 20% stake in Lake Acquisitions, the bid vehicle EDF used to buy British Energy last September. In March, the owner of the British Gas retail brand also built up a 22% holding in Venture.

In both instances, Centrica has played its cards well, paying less than it would have had to a year ago, when energy prices were more than double their current levels. However, the group has realised it lacks sufficient firepower to pay a premium to obtain full control.

Does this piecemeal strategy work? Centrica, in effect, is relying on its majority partners to produce energy for it at a competitive price. There is no guarantee on that front. However, if it bought assets outright, it would have to take on the full costs of production.

Centrica's key strategy is to use its cash wisely. Most of its spare funds were picked up from a 2.2bn [pounds ...