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Sale of Macquarie Generation completed

World Coal,

AGL Energy has completed a AU$ 1.5 billion acquisition of Macquarie Generation (MacGen) assets from the New South Wales (NSW) Government. The assets include two coal-fired power plants in Bayswater and Liddell.

The sale will also see a change in leadership.

The MacGen operations will transition to form part of AGL's Merchant Energy business, headed by group general manager, Anthony Fowler.

Managing director and CEO, Michael Fraser, said that as a result of the acquisition, MacGen Chief Executive, Steve Saladine, will leave MacGen with effect from 6 September, 2014.

Scott Thomas, currently AGL’s general Manager, business customers, has been appointed to the role of General Manager, AGL Macquarie, which will be the new head of business role.

Saladine has been MacGen’s Chief Executive since November 2013.

“Steve has been heavily involved with the NSW generator sale process. I would like to thank him and his leadership team for their professionalism during the MacGen sale process and transition of ownership to AGL,” Fraser said.

“I would also like to acknowledge Steve’s outstanding contribution to the Australian power industry in a career spanning more than 35 years, including a variety of senior leadership positions,” Fraser added.

Saladine said that AGL’s commitment to invest significantly to improve power plant reliability will secure the future of the assets.

“I am pleased that the AGL acquisition will provide greater certainty for the MacGen workforce after a lengthy sale process,” said Saladine.

Fraser said there would be minimal structural changes at MacGen while AGL takes time to learn about the business and determine how best to integrate it with AGL.

“We will operate MacGen with an emphasis on continuity as the business is gradually integrated with AGL over time,” said Fraser.

He emphasised that AGL would honour all commitments previously given by the NSW Government to employees in respect of security of employment and entitlements.

“We are very pleased to have the people and assets of MacGen in the AGL portfolio. They join a company with a rich Australian history going back 177 years, offering experience and diversity of employment across a range of generating assets and disciplines,” he said.

The future is coal

AGL has previously intimated it believes that, as gas export projects in Queensland come online, the market will favour coal-fired power plants over gas. This thinking has motivated the company’s move for MacGen, even though AGL has said there could prove little value in the Liddell power plant, which is tied very much to the future of the Rio Tinto, Hyrdo and CSR-owned Tomago aluminium smelter.

AGL flagged the potential closure of the smelter, due to a sustained downturn in the industry.

In a statement to the stock exchange that coincided with its annual results, AGL said it had bought MacGen on the assumption that Tomago Aluminium would close in 2017, meaning the Liddell power plant would no longer be needed to produce electricity.

Even with the assumed closure of Liddell, however, AGL and Fraser both see value in coal-fired power.

Fraser said that delays to the start-up of Queensland’s gas export projects had pushed down the price of gas in the domestic spot market, and also resulted in Queensland generators exporting electricity to NSW.

Written by Sam Dodson

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