Power retailer AGL rejects nuclear power

energy

The head of Australia's largest power retailer, AGL Energy Ltd, believes a move to nuclear power will not happen in his lifetime because the power plants are uninsurable.
AGL chief executive Paul Anthony made the comments on ABC Television as he described the company's aims to expand to hold 40 per cent of the market through organic growth.
Mr Anthony said he was confident the company could do this despite the collapse of a recent $14 billion proposed merger with rival Origin Energy Ltd. The proposal was rejected by Origin in February and by March it was withdrawn.
The nuclear power debate was a difficult one for Australia, Mr Anthony said. When asked if he thought he would live to see a nuclear power station in Australia, he said he did not.
"Nuclear power stations are uninsurable so the insurer of last resort in all countries has to be the government. The government has to say we're going to underpin the uninsurable risk of the nuclear sector" he said.
He added that nuclear power stations worked on a much larger scale of economy.
"We're talking of thousands of megawatts of generation. It's a long-term investment and nobody really has effectively sorted out the long-term tailing costs of holding redundant nuclear stations for the next 300 years," he said.
When it came to growing to AGL's maximum position in retail, Mr Anthony said this would mean expanding to five million customer accounts in a landscape where there was 12 million. That would be about 40 per cent of the market.
Mr Anthony said that could happen without having to buy the NSW electricity distribution system from the government because, already, the company had 4.1 million customer accounts.
"Whoever gets to that position first commands the lowest cost to serve," he said.
"We are very close to our goal. Can we get there organically? I think we can."
Reflecting on the Origin collapse, he said it was a complex transaction and involved fighting on two fronts.
"... In other words, dealing with the anti-trust provisions and the hostile management of the takeover target," Mr Anthony said.
While it had not been completely rejected, he said: "We look at it and say that it would be a very difficult position to place our shareholders in at this moment in time in opening ourselves up on two open fronts".
He said the entire deregulation of the electricity markets could mean that the company could gain existing gas customers from its NSW market, where they had one million gas customers.
"Once the process is taken through, we have the opportunity to convert the one million gas customers in New South Wales to electric customers," Mr Anthony said.
"Even if we only achieve a 50 per cent success rate, that's half a million additional electric customers we could potentially get."
In terms of the company's goal to quadruple gas production, he said there were numerous possibilities to get there and didn't rule out future acquisitions.
© 2007 AAP