Watchdog on trail of power trio

www.theage.com.au
11 Apr 2012

The competition watchdog has agreed to look at complaints from the Greens that three big power companies, AGL Energy, Origin Energy and TRUEnergy, are using their market clout to frustrate the roll-out of competing wind and solar projects. The Australian Competition and Consumer Commission has written to Greens deputy leader Christine Milne confirming it will consider her claims that the three electricity retailers may be refusing to enter into ''power purchase agreements'' to sell the electricity generated from renewable energy competitors.

The claims came as the Business Council of Australia said the country's long-term energy strategy had become too heavily dictated by climate change policy and relied too much on the assumption that the rest of the world would take firm action on climate change. The council, which is the peak body for chief executive officers of leading companies, wrote in its submission to the government's draft energy white paper that there was now ''an opportunity for a rebalance''.

Senator Milne wrote to the ACCC last month stating that a number of renewable energy companies had privately expressed concern that AGL Energy, Origin Energy and TRUEnergy might be withholding power purchase agreements ''to frustrate the roll-out of competing renewable energy projects''-particularly wind farms. She asked the watchdog to investigate the concerns.

The companies are the only large ''gentailers''-meaning they generate electricity as well as selling it on the retail market. ''Just like the Coles and Woolworths duopoly, I am very concerned that big power companies can potentially abuse their power to not only block the roll-out of renewable energy and energy efficiency, but also drive up power prices to increase their own profit margins,'' Senator Milne said. Renewable energy industry sources say the last-minute collapse of discussions between Origin Energy and the Moree Solar Farm consortium on a power purchase agreement was to blame for the consortium being forced to reapply for government backing under the $1.5 billion Solar Flagships Program.

In a letter to Senator Milne, obtained by Fairfax Media, the office of ACCC chairman Rod Sims said the issue was ''currently being assessed''. Power retailers must get a proportion of their electricity from renewable sources under the nation's renewable energy target of 20% by 2020. Spokespeople for the three big ''gentailers'' said yesterday they were meeting this obligation by investing in renewable energy projects themselves, striking power purchase agreements and buying Renewable Energy Certificates-a form of subsidy for investors in renewable schemes.

The Business Council, meanwhile, stated in its energy submission that ''a key deficiency'' in the draft paper was that it lacked any alternative climate change policy scenarios to that of Treasury's modelling of the Gillard government's carbon price.