Australian Competition Watchdog Delays Decision on Edison Mission Energy Acquisition

The Australian Competition and Consumer Commission (ACCC) has delayed its final decision on the proposed acquisition of Edison Mission Energy by International Power plc, citing concerns that the new owner may gain enhanced ability to raise wholesale electricity prices. As part of the deal, International Power and Japan's Mitsui & Co Ltd have formed a 70-30 partnership to acquire Edison Mission's assets, including several Australian upstream energy operations. The ACCC has agreed in-principle not to intervene in the sale agreement, but its final decision will depend on the acceptance of undertakings included in the contract to alleviate competition concerns.

Key Takeaways:

• The ACCC has delayed its final decision on the proposed acquisition of Edison Mission Energy by International Power plc, pending the acceptance of undertakings to address competition concerns.
• The acquisition would give International Power the ability to exercise market power in the Victorian region of the National Electricity Market, potentially leading to higher electricity prices.
• International Power has offered undertakings to alleviate these concerns, but they are yet to be finalised.
• The ACCC is also considering the divestiture of Valley Power, a 300 MW gas-fired electricity generator currently 60% owned by Edison Mission.
• The partnership between International Power and Mitsui & Co Ltd is a 70-30 joint venture, with the two companies acquiring Edison Mission's assets for an undisclosed price.
• The ACCC chairman, Graeme Samuel, emphasized the importance of addressing competition concerns in the national electricity market, stating that the commission remains "firmly committed to this principle."
• The ACCC has previously stated that it would closely consider the competition effects of any proposed aggregation of electricity generators in the national electricity market.

Statistics:

• 70%: The percentage share of the partnership between International Power and Mitsui & Co Ltd.
• 30%: The percentage share remaining with Mitsui & Co Ltd.
• 2: The number of Victoria's four coal-fired base load generators that will be acquired by International Power.
• 4: The total number of Victoria's coal-fired base load generators.
• 300 MW: The generating capacity of Valley Power, a gas-fired electricity generator proposed for divestiture.
• 60%: The percentage ownership of Valley Power by Edison Mission.

Sources:

• Asia Pulse, Aug 3, 1905.