The Australian Competition and Consumer Commission will not intervene in China Light & Power's proposed acquisition of the Australian non-regulated energy assets of Singapore Power, ACCC Chairman, Mr Graeme Samuel, said today.
The assets being sold or assigned by Singapore Power include the TXU retail business, a long-term lease over the Torrens Island Power Stations in South Australia, a one-third interest in the SEAGas pipeline, the Western Underground Gas Storage facility located near Port Campbell, and the long-term Master Hedge Agreement with Ecogen Energy which enables hedges to be placed with Ecogen Energy for electricity supply from the Ecogen portfolio (Newport Power Station and the Jeeralang power stations) in Victoria.
China Light & Power's existing assets in Australia include Yallourn power station and AusPower, the electricity retail business of Yallourn Energy.
"The ACCC considered that the most significant issue to arise in relation to the acquisition relates to the aggregation of ownership and control of generation capacity. However, following a thorough investigation, the ACCC does not consider that the acquisition is likely to substantially lessen competition in breach of section 50 of the Trade Practices Act", Mr Samuel said.
"In reaching this decision the ACCC took into consideration the high likelihood of new peaking capacity becoming available in Victoria in the near future, particularly through the Basslink interconnector and from new gas-fired generators. The new peaking capacity is likely to act as a competitive constraint on the Ecogen portfolio in times of high demand.
"The ACCC conducted inquiries with market participants. On 11 March 2005, the ACCC released a Statement of Issues which focused those discussions on the competition issues of most interest to the ACCC. The results of the market inquiries were taken into consideration by the ACCC in reaching its decision.
"During the ACCC's analysis of the acquisition the prospect of China Light & Power providing an undertaking to the ACCC was discussed", Mr Samuel said. "Given the finding that there were unlikely to be substantial competition concerns the ACCC did not pursue this course of action.
"The ACCC is acutely aware of increasing consolidation in the energy sector", Mr Samuel said. "The ACCC will closely monitor any further acquisitions that lead to greater consolidation of the retail and generation sectors of the electricity supply chain".
A Public Competition Assessment outlining the reasons for the ACCC's decision will be published on the ACCC's website shortly.