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A.C.C.C. not to oppose Energex's bid to acquire Allgas



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iviedia Release

A.C.C.C. NOT TO OPPOSE ENEROEX'S BID TO ACQUIRE ALLGAS

The Australian Competition and Consumer Commission will not intervene in the acquisition by Energex of Allgas, ACCC Chairman, Professor Allan Fels, said today In Brisbane.

Allgas Is a gas utility based in south-east Queensland which services approximately 80,000 customers and currently holds the exclusive right to supply natural gas in various franchise areae including the southern part of Brisbane.

Energex is an electricity utility based in south-east Queensland and services just under one million customers. At present, the only other franchise electricity retailer In Queensland is Ergon Energy. After reforms being implemented by the Queensland government, the customer franchises held by the existing electricity retailers are being progressively removed to enable users to either purchase electricity directly from generators or from other retailers. The first round of customers with consumption of 40 QWh/year or more became contestable in March this year. A further group of customers with consumption of 4 GWh/year or more are expected to become contestable on 1 October this year, The entire Queensland market is expected to become contestable by January 2001.

The ACCC undertook extensive Inquiries with market participants Jpoluding end users and other gas and electricity utilities. Based on the Information available at this stage, the ACCC found that there are at present separate gas and electricity markets In Queensland. Since Energex and Allgas do not compete in the same market, the merger Is not likely to have the effect of substantially lessening competition.

The ACCC also found that the gas end electricity Industries in eastern Australia are undergoing substantial regulatory reform, and notes a number of Initiatives by Australian governments such as moving to establish a national electricity market, Implementing a national gas code on access to gas pipelines, as well as the ongoing programs in various states to progressively remove franchises held by Incumbent retailers. The ACCC notes comments by a number of gas and electricity retailers that they intend to provide a combined gas and electricity service to their customers. Notwithstanding these prospective developments, the ACCC found on

the evidence available at present that the gas and electricity markets in Queensland have not yet converged to such an extent as to lead the ACCC to a conclusion that Energex and Allgas compete in the same market.

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