Regulator gives AGL, Origin green light

East coast-based companies AGL Energy and Origin Energy have received approval to enter Western Australia’s domestic gas market, where they will join Wesfarmers subsidiary Kleenheat and Alinta Energy.

The approvals, from the state government’s Economic Regulation Authority, are for 10-year licences in the coastal distribution region between Geraldton and Bunbury.

That area has about 700,000 residential customers and 10,000 small business customers, according to the authority.

Origin Energy did not give Business News further details about its strategy, with a spokesperson indicating the company would make further announcements when it was closer to launching in WA.

“Receiving a gas retail licence is an exciting next step towards Origin selling natural gas to homes and businesses in Western Australia," the spokesperson said.

“As Australia’s largest energy retailer, we look forward to offering West Australians our range of competitive products and services.”

The company’s original submission showed that its focus would be on small businesses and households using less than a terajoule of gas annually.

The submission, which Business News reported in December, also said Origin would consider moving into other regions.

An AGL spokesperson told Business News that the granting of a license was an important step, with entry to take place as early as July.

He said the product would compete on price and on service offering, including making user experience simple.

The company had previously promised to spend up to $100 million on a marketing campaign to reach a 10 per cent slice of the market by 2019.

The entry of AGL and Origin would follow that of Kleenheat, which last year had secured about 10 per cent of the market.

That company offered users who switch from Alinta a 20 per cent discount on gas prices.

ERA chair Nicky Cusworth said competition helped to drive down prices and improve services for customers.

“The ERA welcomes more competition in WA’s gas market because it is a win for both households and small business,” she said.

While the gas market has been opened to competition, government regulation has blocked new players from selling electricity to households and small businesses.