AGL to enter WA gas market

AGL Energy is set to take on Alinta Energy and Wesfarmers' subsidiary Kleenheat in Western Australia’s retail gas market, with the company targeting 100,000 customers within two years.

In an investor update today, the Sydney-based company said it expected to spend between $50 million and $100 million between 2017 and 2019 to support its WA market push.

AGL said the size and accessibility of the WA market made it attractive.

It said the contestable gas market comprised 700,000 residential ‘sites’ and 10,000 businesses, with the average bill being $711.

AGL said Alinta currently had 90 per cent market share, with the balance held by Kleenheat after its market entry in March 2013.

Parent company Wesfarmers said recently that Kleenheat had 90,000 residential customers and 1,700 business customers at the end of June 2016, suggesting its market share was north of 10 per cent.

Kleenheat claims to have saved customers some $5 million through cheaper bills.

Despite the impact of Kleenheat, AGL said the WA gas market was primed for competition.

AGL said today it had investigated gas supply, transport and storage options in WA, including services that enabled loads to be ramped up.

The company noted that the retail electricity market was expected to be contestable in the future, opening up 1 million households and 100,000 small businesses.

Today’s update comes days after reports Alinta Energy’s planned stock market float has been postponed.

Alinta’s private equity owners, led by TPG Capital, have delayed the mooted $2 billion initial public offering until next year.