Australia

Through a reform process that was initiated in 1991, the Australian government committed itself to a completely competitive power market by 1999, encompassing the development of independent interstate transmission networks and competitive power generation. The impetus for utility reform came from the Australian National Commission, which saw considerable benefits from the privatization of state-owned utilities. This Commission recommended that ending scores of monopolies would substantially increase national output and employment, while reducing electricity prices and restraining overall inflation {see Endnote 236}.

Until recently, almost all electricity companies in Australia were owned by state governments. Thus far, the state of Victoria (Australia's second most populous state) has been the most aggressive of the state governments in privatizing its state-owned energy industries. In 1995, Victoria began to privatize its electric power industry, in part in a manner modeled after the British electric industry privatization program. Prior to privatization, the Victoria state government merged 29 electricity distribution companies into five companies, while splitting the state generating company into five enterprises, each with a power station.

The year 1995 saw the first wave of privatization of Victoria's electric power industry. That year, Victoria sold off all of their electric power distribution companies {see Endnote 237}, raising $6.7 billion in the process {see Endnote 238}. All were purchased (at least in part) by U.S. companies (Table 7).

Table 7. Australian Electric Utility Privatization-Related Mergers, Acquisitions, and IPP's


Victoria's power generation facilities are due to be privatized in 1996. For some of the U.S.companies involved, these Australian purchases constituted their first overseas investments. The first sale involved Utilicorp's 49.9-percent purchase of United Energy (Utilicorp's Australian partners were Australian Mutual Provident Society and the State Authorities Superannuation Board) for $1.2 billion {see Endnote 239}. The next purchase involved General Public Utilities, purchasing fifty percent of Solaris Power for $713 million, plus an additional $110 million in franchise fees {see Endnote 240}. Subsequent transactions included Texas Utilities' purchase of Eastern Energy for $1.6 billion {see Endnote 241}, PacifiCorp's purchase of Powercor for $1.6 billion, and Entergy's purchase of CitiPower, Ltd., for $1.2 billion {see Endnote 242}.

In 1996, Victoria initiated the privatization of its power generation industry. PowerGen of the United Kingdom (itself a recently privatized electricity generation company) won its bid for the Yallourn power generation facility for $1.8 billion {see Endnote 243}. The Yallourn plant supplies roughly one-quarter of Victoria's electricity {see Endnote 244}. Mission Energy of the United States later purchased the Loy Yang power plant for $1 billion {see Endnote 245}.

There have also been some privatization efforts outside of Victoria. Northern States Power (of the United States) purchased a 37-percent equity stake for its services in rehabilitating and operating the 1,680-megawatt Gladstone Plant in Queensland {see Endnote 246}. SCE Corporation (also of the United States), through its Mission Energy Corporation subsidiary, plans to build a $111-million power plant in western Australia {see Endnote 247}. Japan's Sithe Energies is constructing Australia's largest cogeneration plant, a 175-megawatt gas-fired plant near Sydney. The Australian government sold the Moomba/Sydney natural gas transmission pipeline to Australia Gas and Light (51 percent) and Nova Corp of Canada and Petronas of Malaysia (49 percent) for $535 million.