Distributor merger to save millions

Queensland’s Palaszczuk Government has abandoned its election promise to merge the state-owned power generators into one business as it forges ahead with plans to bring two of its retail electricity distributors under one banner.

Treasurer Curtis Pitt unveiled details of the new single power retailer late last year, which will be formed with the merger of two of the three entities, Energex, Ergon and Powerlink with the release of the state’s Midyear Economic and Financial Outlook.

The plan is a halving of the plan Labor took to its last election, which involved merging generators CS Energy and Stanwell into one corporation, and distributors Energex, Ergon and Powerlink into another to save money, as reported by The Australian.

Nonetheless, Australian Competition and Consumer Commission chairman Rod Sims challenged the plan, saying he was concerned about the impact of merging state-owned coal-fired generators.

“We are concerned by any proposal that has the potential to affect competition between Stanwell and CS Energy,” Mr Sims said.

Mr Pitt confirmed the government was now only moving to merge the distributors, which The Australian reportedcould save up to $680 million. Treasurer Curtis Pitt said the merged business would deliver regional jobs and energy solutions to remote and isolated communities around Queensland.

“We are building an energy business for the future and it will be the largest power company in Australia with more than
$24 billion dollars in assets,” he said.

“The merger would remove duplication in areas like administration, shared services, boards, management and corporate costs. There will be no forced redundancies, however, all four businesses are expected to reduce their staff levels by a combined 366 people between now and 2020 as a result of the merger.”

Acting Energy Minister Leeanne Enoch said the business would offer solar technology solutions, battery storage, energy management systems, smart meters and demand management services to respond to customer needs.

“Creating this new energy services subsidiary is a key element of the Queensland Government’s plan to merge Energex and Ergon Energy to improve network efficiency and reduce pressure on electricity network prices for customers over the longer term,” Ms Enoch said.

“The two distribution companies will be consolidated into a single new network business, with a new parent company expected to be in place by mid-2016.

“The merger will mean the two networks can better leverage scale to invest in new technologies and to find ways to better manage increasing levels of solar generation.”

The structure of the new energy services business will ensure it operates on a level playing field with other businesses that offer new energy services.