Southern Energy Inc., a unit of Southern Company, announced today that British subsidiary South Western Electricity plc (SWEB) plans to sell its supply business to London Electricity for $256 million (?160 million).

In the deregulated U.K. electricity market, the supply business purchases wholesale electricity and then sells it competitively to retail customers. The supply business includes billing, payment processing and answering customer questions. SWEB, based in Bristol, England, will retain its distribution business, the network of wires and other equipment used to deliver electricity to 1.3 million customers in Southwest England.

The transaction is subject to regulatory approval.

“SWEB has found its role in the deregulated U.K. market, and that role is one of a distributor,” said Rick Pershing, Southern Energy’s executive vice president overseeing international operations. “It’s inevitable that the U.K. market will see consolidation of energy suppliers, and it made more sense to sell our supply business now than to try to grow it to the size suppliers will need to be.”

Pershing noted that SWEB will continue to focus on reliability and customer service in the distribution business, where the company has invested more than $192 million (?120 million) in the last three years to improve its network.

“Southern Energy is committed to the continued development of SWEB as a leading electricity distributor, and SWEB is committed to providing Southwest England with the best service possible,” Pershing said.

Southern Energy holds 49 percent of SWEB while PP&L Global holds 51 percent. Southern Energy retains operational and management control.

Southern Energy, a unit of Southern Company, develops, builds, owns and operates power production and delivery facilities and provides a broad range of services to utilities and industrial companies around the world. Southern Energy supplies energy in 10 countries on four continents.

Southern Company (NYSE: SO), the largest producer of electricity in the United States, is also the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric.

PP&L Global announced earlier this week that it has reached an agreement to acquire majority ownership of Empresas Emel, one of Chile’s largest electricity distribution companies. PP&L Global now has investments and commitments totaling more than $2 billion in Europe, Latin America and various U.S. locations.

PP&L Resources Inc. is a Fortune 500 company based in Allentown, Pa. It also is the parent company of PP&L Inc., which delivers electricity to 1.3 million customers in eastern and central Pennsylvania, generates electricity, and markets wholesale energy in the United States and in Canada; and PP&L EnergyPlus Co., which sells competitively priced energy and energy services to newly deregulated markets.