The ACCC has today announced that it will not oppose EnergyAustralia’s proposed acquisition of Ecogen Energy.
Ecogen Energy owns two gas-fired electricity generators, Newport and Jeeralang, in Victoria. EnergyAustralia is an integrated energy generator and retailer primarily operating in NSW, Victoria, Queensland, South Australia and the ACT.
“The ACCC has concerns about competition in wholesale electricity markets and this acquisition will effectively entrench existing concentration and vertical integration. However, while we consider this acquisition will lessen competition, it is unlikely to result in a substantial lessening of competition which is the test we must apply,” ACCC Chairman Rod Sims said.
EnergyAustralia already controls the output of Ecogen Energy under a Master Hedge Agreement until April 2019 so there would be no change in the relevant markets until it expires.
“The key issue for the ACCC is whether the acquisition would affect competition after the master hedge agreement expires. However, our inquiries indicated there is uncertainty regarding future market conditions, including whether an alternative owner would operate the generators significantly differently from EnergyAustralia,” Mr Sims said.
“Our view is this particular transaction is unlikely to significantly affect electricity prices or prevent new retailers from entering the market and offering alternatives for consumers.”
The ACCC review focussed on both the wholesale supply of electricity in Victoria and the retail supply of electricity to end users in Victoria, including the impact on liquidity in futures markets.
Background
The ACCC will provide the final report to the Treasurer in June 2018 on its Retail Electricity Pricing Inquiry.
Ecogen Energy is a wholly owned subsidiary of IFM Investors. IFM Investors is currently conducting a competitive bidding process for Ecogen Energy’s two gas-fired electricity generators in Victoria: Newport power station and Jeeralang power station.
EnergyAustralia is one of Australia’s largest energy retailers with more than 2.6 million electricity and gas accounts across NSW, Victoria, Queensland, South Australia and the ACT. EnergyAustralia is a wholly owned subsidiary of Hong Kong based CLP Holdings Limited. EnergyAustralia also owns electricity generators, including Yallourn in Victoria and Mt Piper and Tallawarra in New South Wales.