SALE TO HELP DRIVE ENERGY MARKET REFORM PROCESS

In preparation for the introduction of full retail competition into the domestic electricity market Sun Retail – comprising the retail business arm of Energex - and the contestable elements of Ergon Retail will be sold off, Premier Peter Beattie announced today.

Mr Beattie said independent experts Boston Consulting had recommended the move and the State Government believed it would deliver benefits to consumers and the economy.

He said proceeds from the sale – expected to be in excess of $1 Billion - would be used to establish the Queensland Future Growth Fund.

“The retail arms of Energex and Ergon represent only a small part of their business – less than 10% of earnings,” Mr Beattie said.

“Their core business is distribution – the provision of poles and wires – and that won’t change.

“However when full retail competition is introduced in the middle of next year they will lose their position as monopoly retailers in their respective markets – they will have to compete against other companies from interstate.

“They will be at a competitive disadvantage against larger, more experienced retailers with lower operating costs, and more experience in attracting and retaining customers in a competitive market.

“Instead of focusing on competing with these private companies we want them focused on the bigger picture of providing essential services for Queenslanders.”

Mr Beattie said the decision would have minimal impact on customers and would not result in any job losses.

“When the businesses are eventually sold customer accounts will simply be transferred to the purchaser of the business,” he said.

“Ergon’s domestic customers in regional Queensland will not notice a difference at all and with Energex the only difference customers will notice is that a new company is sending the bills.

“In fact, because the new purchasers will be competing against other companies in a contestable market we anticipate customers will actually see their bills drop and service improve.

“And if the customers aren’t happy with their service they will be able to shop around for the best deal that suits their lifestyle, family and household needs.

“In respect of employees there will be approximately 250 people across both Energex and Ergon affected by this decision.

“There will be no forced redundancies for award or non-contract employees – those employees that do not transfer to the new owners will be offered reversion right opportunities of employment with the Energex or Ergon distribution businesses.”

Deputy Premier and Treasurer Anna Bligh said the Government had not adopted all of the recommendations from Boston Consulting.

“They recommended the gradual Government sell off our generation assets,” Ms Bligh said.

“This will not happen under our Government.

“Government ownership of generation has provided customers with security of electricity supply.

“As Queensland’s demand for electricity grows – we are the fastest growing market in the nation – this security is further underpinned through continued ownership of these important assets.

“We want Queensland to have the strongest, safest and most reliable electricity supply network in Australia.”

Ms Bligh said all of the Energex retail business would be divested in two tranches.

“We will place the Energex retail activities in a new entity ‘Sun Retail’ and this entity will then be sold in two tranches via a trade sale,” Ms Bligh said.

“In addition as part of this process the Energex gas business including the AllGas Network will also be sold. This is not a core business of Energex and was only purchased in 1998.

“In relation to Ergon only their retail book for contestable customers who use above 100 megawatts per year will be sold.

“We will retain ownership of the part of Ergon’s retail business which covers the market for domestic customers below 100 megawatts per year.

“This is important because it will ensure we continue to provide subsidies to homes and small businesses in regional and rural areas of the State serviced by Ergon and that they are not at a financial disadvantage because of the sale or because of where they live.”

Minister for Energy John Mickel said the government owned corporation Enertrade would also be restructured.

“Following a review Enertrade will have their contracts with private power stations allocated to our other energy government owned corporations,” he said.

“They will retain responsibility for their gas assets in North Queensland. In particular they will be looking at fast tracking the Moranbah to Gladstone gas pipeline to support new business and industry in the region.”

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