A$1.5bn Australian power acquisition to be scrutinised by regulator

A deal that saw the purchase of two state-owned coal-fired power plants by AGL Energy is to be examined by the Australian regulatory authority.

AGL may have to sell another power plant so as to satisfy the competition authority after paying $1.51bn for the coal-fired facilities in New South Wales. The plant purchases comes as part of a deal which saw the Australian gas and electricity retailer buy Australian state-owned power company Macquarie Generation.

The purchase of Macquarie Generation depends on approval by the Australian Competition & Consumer Commission, the Sydney-based company said in a statement. The regulator, which said last week an acquisition by AGL would likely reduce retail market competition, is expected to decide by March 4.

Buying Macquarie Generation’s two coal-fired power plants, which account for more than a quarter of electricity capacity in Australia’s most-populous state, will increase AGL’s share of the national market to 21 per cent from about 12 per cent.
Australian competition authority
It would also make AGL the largest generator in New South Wales, Victoria and South Australia, the ACCC said last week.

“AGL believes there is a strong factual basis to demonstrate that the acquisition of Macgen will not result in a substantial lessening of competition,” the company said in the statement today. AGL believes its response to the regulator will address the concerns, according to the statement.

The retailer may need to offer to sell the Liddell power station to gain regulatory approval, according to a Commonwealth Bank of Australia report earlier this month.

The government expects to complete the deal by mid-April, should the competition regulator approve the purchase.

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