Deregulation : unlocking value : the Australian experience

Macquarie is a global investment bank based in Australia whose international focus is on niche markets such as infrastructure and utilities. A corporate review of Macquarie is presented along with a review of the evolution of the utility industry from the stages of an integrated utility to fully unbundled entities. In the first stage, the utility is vertically integrated and owned by government, or it is highly regulated. The second stage of evolution involves the unbundling of the utility into separate generation, transmission and distribution companies, each preparing for competition. The third stage involves the introduction of competition to power generation and retail sectors. Transmission and distribution remains regulated in the third stage. The fourth stage involves down-sizing in response to competition and benchmarking. It is also a period of convergence between electricity and gas. The fifth and final stage is for deriving value. Deregulation results in major structural changes and utility managers have to decide how the utility can best deliver value to the shareholders in the new environment. The author discusses how these lessons can be applied to the case of electric power industry deregulation in Alberta