EnergyAustralia trebles profit, even as consumers flee

Australia’s big three gen-tailers continue their orgy of money making at the expense of consumers, with EnergyAustralia this week reporting a trebling of its half-year profit, even as wrung out customers quit the company by the tens of thousands.

The owner of the ageing Yallourn brown coal generator, itself owned by Hong Kong-listed CLP Group, on Monday reported a net profit of $A375 million to June 2018, up from $A129 million a year earlier.

The surge in profit comes off the back of sustained high wholesale electricity prices – even despite a reported customer churn of around 60,000 for the half – and apparently unscathed by the energy policy war playing out between the federal government and the states.

As Morgan Stanley analysts note, Energy Australia’s average household electricity consumption remained stable, while its average selling price for electricity increased by around 15 per cent, “as wholesale and retail price increases flowed through to the bottom line.”

EnergyAustralia attributes the high retail prices to the “closure at short notice of the Hazelwood and Northern coal power stations – a factor that would also have benefited the company on the generation side, allowing the Latrobe Valley plant to fill the breach (when it wasn’t breaking down).

As the results statement notes, the Victorian government this year extended the mining licence for the Yallourn mine for six years, allowing it to supply the adjacent power station until 2032, the plant’s end of technical life.

The company’s profitability also seems to be untouched, as yet, by what EnergyAustralia describes as the “increasing costs of regulatory compliance, with many industry reviews and interventions commencing in 2017 and continuing in 2018.”

This no doubt includes the recently completed review by the Australian Competition and Consumer Commission, which has proposed measures to rein in power prices and expose the “big three” to more competition.

On the up-side, the company – which is a cautious supporter of the National Energy Guarantee (for obvious reasons), but is also on the record as saying that building new coal plants in Australia would not help bring energy prices down – says in its outlook that wholesale electricity prices are likely to start coming down “as a large number of wind and solar projects enter the market.”

And it says that “new and ongoing initiatives, including current studies of flexible capacity options such as pumped hydro, battery storage, and gas-fired generation,” will support its long-term plans for the generation of affordable and sustainable energy.

“We’re optimistic households are through the worst of it and, finally, that all parts of the energy sector understand the challenge, and are working toward putting families back in control of their energy costs,” Energy Australia managing director Catherine Tanna said.

“There’s more to do, but the ingredients are there for an affordable, stable and reliable energy system.”