The Australian Competition and Consumer Commission (ACCC) has knocked back the New South Wales government’s plan to sell its biggest generator.

The Treasurer Mike Baird announced last month that the government would sell Macquarie Generation’s two coal fired plants in the Hunter to AGL for $1.5 billion.

But the ACCC will not sign off on the deal because of concerns it would reduce competition.

It says the proposed acquisition would mean the three largest energy retailers in NSW would own a combined share of up to 80% of electricity generation capacity.

Treasurer Baird says the power deal is now off and there won’t be any fire sale.

He says the generator will only be sold off if the sale exceeds retention value.

“It is very clear we are not going to undertake transactions where we sell assets for less than they are worth and that should give some confidence to the people of NSW,” he said.

“We are doing everything possible to release capital to get on with infrastructure but we are not going to do it at any cost.

“We are not going to do it where assets are sold for less than they are worth.

The money from the sale would have gone to pay for infrastructure in New South Wales.

The government will now review the ACCC’s decision before deciding on its next steps.