Powergen and Scottish & Southern Energy (SSE) have reportedly each put forward a �2bn bid to take over the European assets of troubled electricity firm TXU.

US-based TXU, which generates and distributes power, and which has 5.5 million customers in the UK, last week pulled the plug on its British operations, having been unable to ride out the fall in wholesale prices.

Now, Powergen, owned by Germany's Eon, and SSE, which owns a chain of power firms including Southern Electric and Scottish Hydro, are jostling to take over TXU Europe, and a deal may be done by the end of the week.

According to media reports on Sunday, TXU Europe could be allowed to go into administration if a deal is not done quickly.

The financial troubles of TXU Europe, one of the biggest purchasers of power from UK generators, have sent shockwaves through the already nervous electricity industry.

Speedy sale

The structure of any TXU Europe sale is not yet clear.

The most valuable parts of the company are the UK regional electricity distributors, the former Norweb and Eastern Electricity.

The firm also has assets in Germany and Scandinavia, which could be spun off in order to streamline a sale.

Britain's Centrica, eager to boost its European operations, has been tipped as a likely buyer for TXU's German assets.

A deal needs to be done quickly, since TXU Europe has a number of creditors that could trigger its collapse, if they called for repayment of outstanding debts.

Credit-rating agency Standard & Poor's last week warned that TXU Europe was in jeopardy, and cut its assessment of the firm's bonds to "junk" status.