Contact: Matt Thomson
Deloitte
Partner - Energy, Infrastructure & Resources
+61 (0) 7 3308 7082

Contact: Anna Brown
Deloitte
Media & Communications
+61 (0) 2 9322 7567

Deloitte head of Energy in Queensland, Matt Thomson, said today that the Owen Report’s key recommendation that the NSW Government sell off its electricity generation assets alongside its retail energy businesses served as an alert for the Queensland Government.

“Putting to one side the question of whether the NSW government will choose to accept Professor Owens’ recommendation, if considered from a Queensland economic and commercial perspective, the sale of NSW generation assets could have a number of significant impacts, said Mr Thomson.

“The recent Queensland Government’s decision to divest the retail arms of Energex and Ergon Energy paid dividends for the Government.

“In contrast, however, the recommended sale of generation assets in NSW has the potential to reduce the market value of Queensland tax-payer owned generators.

"If privately owned energy players commit the $7-8 billion needed to meet future generation requirements in NSW over the next 10-15 years there is likely to be reduced interest in any future purchase of the Queensland Government’s suite of generation assets.

“Given the expectations of future load, the sale of NSW electricity generation assets would also serve to reduce the effective investment barrier that has seen electricity generation under-investment in NSW in favour of Queensland.

"As national energy players integrate their retail and generation businesses in NSW, the propensity of private energy market players to continue to invest in additional future generation in Queensland may reduce."

Mr Thomson added, “If implemented in full the Owen Report would mark a significant shift in NSW energy policy.

"However, the Report does provide the NSW Government a “way out” of full privatisation by offering an alternative model whereby it maintains ownership over the power stations yet leases the operation of those stations to the private sector.

“While there may be question marks over how attractive a lease option is and its impact on the value of the NSW retail businesses, it is not an untried model as demonstrated by the South Australia Government’s decision to lease the State’s distribution network.

“The Queensland Government, through its sale of its wind generation assets, has shown its awareness of the economic potential to be optimised.

"In order to maximise further value to Queensland taxpayers, it must now carefully consider the timing of any future Queensland generation asset sell off in light of the NSW report recommendations”.