CEO of Energy Australia, discusses Australia's energy needs and solutions, ABC, 13/09/2017
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Electricity price hike fuels trebling in profits for EnergyAustralia
EnergyAustralia operates the Yallourn brown coal-fired power station in Victoria.
EnergyAustralia has almost trebled its first-half operating earnings as it took advantage of higher wholesale electricity prices but its Hong Kong-listed parent has advised of softer prices ahead as well as increasing pressure on retail margins.
making the Australian operation by far the most improved business for parent CLP Group. Energy Australia , making the Australian operation by far the most improved business for parent CLP Group.
a 48 per cent jump in operating earnings for EnergyAustralia last year
fuel speculation that CLP will once again consider an IPO
EnergyAustralia managing director Catherine Tanna in February defended the improvement, pointing out that the company had often made no returns in earlier years. It has written down assets by $1.9 billion since 2006.
Still, in the first half, EnergyAustralia was the main driver of a 33.3 per cent jump in CLP's group-wide operating earnings, to $US7.436 billion, as profits in its home market edged up only 3.2 per cent.
"Outside of Hong Kong, our results in Australia continued to strengthen," CLP chairman Sir Michael Kadoorie said in a statement.
"Demand has stayed strong amid tight supply conditions driving up wholesale prices," he said, noting this had in turn put customers under pricing pressure and driven the introduction of new products to help customer keep energy costs under control.
EnergyAustralia, owner of the large Yallourn brown coal generator in Victoria, reaped the benefit of improved performance at its power stations during the period of high wholesale prices.
"EnergyAustralia's generation has effectively supplied our customers, especially at peak price times, successfully mitigating the risks of not being able to meet customer demand on peak days and during generator outages," CLP said.
But it also pointed to higher costs for regulatory compliance and increased government intervention as federal and state governments take steps to tackle surging retail prices.
CLP blamed the high retail prices on the closure at short notice of the Hazelwood and Northern coal plants and said they "continued to weigh heavily on customers". EnergyAustralia lost 60,000 customers, or 2 per cent of its total, during the half.
"Intense competition for mass market customers in the first half of the year resulted in lower sales and margin pressure, impacting customer account numbers and profitability," it said.
"Intense retail competition shows no sign of abating, placing further pressure on margins as EnergyAustralia focuses on retaining and acquiring customers."
CLP noted the Victorian government had extended the coal mining licence for Yallourn for six years Energy Australia , allowing coal to be supplied to the generator until 2032, the end of the plant's technical life. It also pointed to
the acquisition of two gas-fired power stations in Victoria in April,
which ensured EnergyAustralia's access to peaking generation to support renewables.
Standard & Poor's lifted its credit rating on EnergyAustralia to BBB+ from BBB last July.
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