The Australian Energy Market Operator has revealed that the deal for Duke Energy to buy the company’s power generation assets has been announced, with the value of the deal at $10.4 billion.
The acquisition is valued at about $3.8 billion.
This is a significant boost to the value and performance of the utility’s assets in Australia, the ANAO said in a statement on Thursday.
It also means the acquisition will give the utility access to a more competitive market for its generation, transmission and distribution business.
The deal was approved by the Australian Federal Government’s board of directors on January 18.
The ANAOs decision was made as part of the company buying spree that also saw the sale of power from the Queensland National Electricity Market to the Australian Energy Regulator, the purchase of its Australian Power Generation assets, and the purchase and sale of its South Australian assets.
The combined entity will be called the Duke Energy Australian Electricity Regulator.
This new entity will also oversee the wholesale electricity market in Australia.
The company will continue to operate the existing Duke Energy Australia operations.
However, the Australian Government will pay a $5 billion investment to the company over the next 12 years.
It is understood the investment will fund the construction of a new, $2.5 billion regional power station.
The purchase of Duke Energy’s assets is expected to generate an additional $100 million in direct and indirect costs, and provide a net gain of $4.6 billion to the Commonwealth.
The Australian Government is expected pay $5.7 billion over a 10-year period over the purchase period.
This will include a capital investment of $1.5bn to expand the existing AER.
The total value of Duke’s assets will also be increased by about $1 billion in 2019-20, to $10 million.
This represents a net capital gain of about $10 per share for the company.
The new entity, which will take over the operations of the Australian Electricity Market, will also provide the Commonwealth with an additional shareholding of the Duke Power assets.