Truenergy Not For Sale, But Change 'inevitable'

The Age

Saturday December 8, 2007

Mathew Murphy, energy reporter

TRUenergy managing director Richard McIndoe has dismissed industry speculation that Australia's third-largest energy retailer is for sale, but concedes that consolidation in the sector is "inevitable".

TRUenergy has been talked about as a potential takeover target for a while. But Mr McIndoe said he did not expect any suitors to make a move until the multibillion-dollar privatisation of the NSW electricity sector became clearer.

Rumours surfaced this week that Origin Energy and Babcock & Brown were looking at TRUenergy as a possible target. Both declined to comment on the speculation, while Mr McIndoe said he had not received any "formal offers".

"CLP (parent company China Light and Power) has no intention of selling its business here in Australia," he said.

"Investment banks have approached me with pretty much every combination around. Over the last six months different combinations including AGL and Origin and Babcock & Brown have been thrown around. When NSW privatisation happens, I think people will start focusing on that instead."

TRUenergy handles more than 1.2 million customers and has $5 billion worth of assets, including Yallourn power station.

Mr McIndoe said he did not believe the failed merger of AGL and Origin this year had put energy companies off mergers.

"I think over the last several months there has been a lot of interest with what has been happening at AGL, wholesale price volatility, suggestions of tie-ups and mergers and the like. I believe this market is probably too fragmented . . . the industry needs to consolidate not only to reduce costs but to reduce risks."

Mr McIndoe's comments came as TRUenergy's owner pledged to cut the carbon intensity in its power generation portfolio by 75% by 2050, vowing not to build any conventional coal-fired power stations in developed countries.

He said the plan, which follows TRUenergy's commitment to reduce carbon emissions by 60% by 2050, was a business and environmental decision.

"We are preparing our business now for what we think is going to be the business environment of the future and if we have a suite of low-emissions generation across the Asia Pacific, we think it puts us in a good position in the long term," he said. "We are going . . . towards cleaner coal or lower-emitting technologies like gas, like nuclear, like renewables."

LINK

? www.truenergy.com.au

© 2007 The Age

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