"We'll see a reorganisation in the years to come. It is hard to conceive of us all remaining independent," she said.

There is evidence that the rationalisation has already begun with AGL buying power businesses in Victoria and South Australia as well as Origin Energy acquiring a gas retail business, Gasmart, in Victoria.

Ms O'Reilly added more rationalisation would occur in regulated assets and this should not draw opposition from regulators as big energy conglomerates would still have to submit to pricing regimes overseen by the regulators.

GasNet is looking to exit the Australian energy market after two disastrous investments cost the company about billion dollars. Namely, the GasNet purchase from the Victorian Government in June 1999 and the 1997 acquisition of electricity business, PowerNet.

The company is now in the market raising $260 million in a public offering. GasNet is expected to yield cash returns of 11 per cent unfranked and see profit growth of 4.4 per cent in 2002.