The Australian Competition and Consumer Commission today granted interim authorisation to a scheme for the provision of hedging cover to the electricity industry in Victoria.

The scheme, known as the Value of Lost Load Contract Repackaging (VCR) Scheme, was proposed by United Energy as a potential replacement for the compulsory Generator Co-Insurance Scheme, scheduled to terminate on 30 September 1996.

"The VCR Scheme represents an important step toward a competitive market for the supply of electricity in Australia," ACCC Chairman, Professor Allan Fels, said today.

Through the VCR Scheme, electricity retailers may obtain hedging cover against the risk of very high prices and generators are encouraged to ensure the availability of capacity.

"The VCR Scheme will benefit the public by:

  • enhancing market responsiveness in the pricing of electricity;
  • encouraging generators to make generating capacity available to the market; and
  • facilitating transition of the Industry from a regulated environment."

These benefits are expected to outweigh any anti-competitive detriment associated with the VCR Scheme.

The ACCC has provided interested parties with 14 days to request a pre-decision conference before proceeding to possible final authorisation of the VCR Scheme.

Copies of the report granting interim authorisation are available from Ms Alison Milton at the Commission on 06 264 2880.