AGY-4020 | Macquarie Generation

Full description

Macquarie Generation was established on 1 March 1996 under the Energy Services Corporations Act 1995 (Act No.95, 1995) as an electricity producer. (1) Pacific Power and Delta Electricity were also established as electricity producers under the Act and all three were State Owned Corporations and were therefore also regulated by the State Owned Corporations Act, 1989 (Act No.134, 1989).

Macquarie Generation was responsible for the production, marketing and sale of bulk electricity. A major component of this was the management and operation of the Bayswater and Liddell power stations located in the Upper Hunter Valley between the towns of Muswellbrook and Singleton. The two power stations were transferred from Pacific Power together with their associated staff and assets and met approximately forty percent of New South Wales’ electricity demand. (2)

The principal objectives of Macquarie Generation constituted under the New South Wales Energy Services Corporations Act 1995 were:
a) to be a successful business and to that end: operate at least as efficiently as any comparable business; maximise the net worth of the State’s investment in the corporation; and exhibit a sense of social responsibility by having regard to the interests of the community in which it operated
b) to protect the environment by conducting its operations in compliance with principles of ecologically sustainable development as prescribed by the Protection of the Environment Administration Act, 1991;
c) to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates;
d) to operate efficient, safe and reliable facilities for the generation of electricity;
e) to be an efficient and responsible supplier of electricity; and
f) to be a successful participant in the wholesale market for electricity. (3)

The functions of electricity generators were:
a) to establish, maintain and operate facilities for the generation of electricity and other forms of energy: and
b) to supply electricity and other forms of energy to other persons and bodies. (4)

An electricity generator could also: provide facilities or services that were ancillary or incidental to its principal functions; and/or conduct any business (whether or not related to its principal functions) that it considered would further its objectives. (5)

Macquarie Generation was managed by a Board of Directors who were responsible for the corporate governance of the Corporation, including strategic direction and performance, establishing goals for management and monitoring the achievement of these goals. The Board’s constitution and procedure was regulated by Schedule 8 of the State Owned Corporations Act. The Board of Macquarie Generation consisted of:
a) the Chief Executive Officer
b) one director appointed by the voting shareholders on the recommendation of representatives of the portfolio minister and the Labour Council of New South Wales
c) between two and five directors appointed by the voting shareholders at their discretion, one of whom was to be appointed chairman. (6)

The Board’s role and responsibilities under the Energy Services Corporations Act 1995 were:
a) appointing a Chief Executive Officer following consultation with the voting shareholders;
b) setting the remuneration and allowances for the Chief Executive;
c) appointing an acting executive officer (if required); and
d) declaring the dividend which was determined in consultation with the voting shareholders. (7)

These roles and responsibilities were further set out in the Corporation’s Articles of Association as amended at 27 February 1999. In 2004, the Board was comprised of at least six non-executive Directors and may include the appointment of the Chief Executive as the Managing Director. Four Directors constituted a quorum. (8)

Under changes to the electricity industry introduced by the Australian and New South Wales Governments in the mid 1990s, generators such as Macquarie could market and sell electricity in the state wholesale market. This prepared electricity generators for their eventual entry into the national electricity market.

On 5 May 1997 stage 1 of the National Electricity Market (known as NEM1) commenced. This saw Macquarie entering competitively into business with Victorian generators for supply in that State in addition to its established business in New South Wales. The following year the electricity market developed further with the entry of South Australia into the market and the creation of the National Electricity Market Management Company and National Electricity Code Administrator. (9)

In 1997, Macquarie Generation’s Senior Management team consisted of the Chief Executive and Managing Director, Chief Financial Officer, Company Secretary, Manager Bayswater Power Station, Manager Liddell Power Station, Manager Human Resources, Manager Energy Trading, Manager Fuel & Environment, Manager Commercial Services, Production Manager Bayswater Power Station, Manager Liddell Power Station. (10) The corporate office was located at Newcastle.

In December 1998, the National Electricity Market Management Company commenced formal management of a National Electricity Market comprising New South Wales, Victoria, South Australia and the Australian Capital Territory. By mid 2000, Macquarie Generation was the largest electricity producer in the National Electricity Market and supplied almost twenty-two percent of south-eastern Australia’s electricity needs. Queensland was to enter the national market in October 2000. (11)

By 2003, Macquarie Generation’s Board consisted of six Non-Executive independent Directors and one Executive Director. The Chairman is nominated by the Shareholders and is an independent Non-Executive Director. (12)

The Cobbora Coal Project was a joint venture between state-owned power companies Macquarie Generation, Delta Electricity and Eraring Energy to acquire and develop the coal resources at Cobbora. In 2008 each company initially worked through a subsidiary company. These were: Midwest Development Corporation Pty Limited, which was incorporated on 13 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Macquarie Generation for $43.2 million on 25 February 2011; Mid West Primary Pty Limited, which was incorporated on 7 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Delta Electricity for $43.2 million; and Rocky Point Holdings Pty Limited, which was incorporated on 6 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Eraring Energy for $27.7 million on 25 February 2011. (13)

Also in the group were the following entities. Cobbora Management Company Pty Limited was incorporated on 11 February 2009 with its principal activity being to act as agent for the Cobbora Unincorporated Joint Venture. Cobbora Unincorporated Joint Venture was an unincorporated joint venture between Midwest Development Corporation Pty Limited, Mid West Primary Pty Limited and Rocky Point Holdings Pty Limited, with its principal activities being the development and production of coal reserves. CCP Holdings Pty Limited was incorporated on 5 September 2008, with its principal activity being to act as trustee for the Cobbora Coal Unit Trust. Cobbora Coal Unit Trust was formed on 10 October 2008, with its principal activities being to hold assets to assist in the sourcing and development of a coal resource in New South Wales. Cobbora Rail Company Pty Limited was incorporated on 13 January 2011, with its principal activity being to invest in rail operations for the Cobbora Coal Mine. Cobbora Coal Mine Pty Limited was incorporated on 13 January 2011, with its principal activity being to invest in the mining operations of the Cobbora Coal Mine. (14)

Macquarie Generation was abolished on 27 February 2015 under the Electricity Generator Assets (Authorised Transactions) Act 2012 (Act No.35, 2012). (15)

Endnotes
1. Energy Services Corporations Act, 1995, Schedule 1, Part 1.
2. Report of Macquarie Generation for the four month period ended 30 June 1996, p.3.
3. Energy Services Corporations Act, 1995, section 5.
4. ibid., section 6.
5. loc. cit.
6. ibid., Schedule 2, section 1.
7. ibid., Schedule 2, sections 2-4.
8. Macquarie Generation website http://www.macgen.com.au/about_us/Cherters_Board.htm (accessed on 29 June 2004).
9. Report of Delta Electricity for the year ended 30 June 1999, p.4.
10. Report of Macquarie Generation for the year ended 30 June 1997, p.42.
11. Report of Macquarie Generation for the year ended 30 June 2000, p.3.
12. Report of Macquarie Generation for the year ended 30 June 2003, p.42.
13. NSW Auditor-General's Report 2011, Vol. 4, pp.30-31, PDF online at http://www.audit.nsw.gov.au/ArticleDocuments/224/06_Volume_Four_2011_Cobbora2.pdf (accessed 30 July 2014).
14. Ibid., p.31.
15. Electricity Generator Assets (Authorised Transactions) Act 2012, Sch. 6 cl.3(2); Electricity Generator Assets (Authorised Transactions) Amendment (Dissolution of Macquarie Generation) Proclamation 2015 under the Electricity Generator Assets (Authorised Transactions) Act 2012; notified NSW Legislation Website (2015 No 83), 27 February 2015.