Origin juggles profit with customer churn, coal with renewables | RenewEconomy

Origin juggles profit with customer churn, coal with renewables

Origin results tell similar tale to AGL – a big utility making money out of rising prices, and battling a backlash from consumers.

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Origin Energy has reported increased earnings from electricity and natural gas for the first half of FY2018, at the same time as battling a big increase in it customer “churn” rate, with the company losing 47,000 retail customers over the past six months, presumably in search of a better, cheaper deal.

The story of Origin’s results – ignoring a major write off of gas field investments in Queensland – bears a strong resemblance to rival AGL – both are growing profits from higher electricity prices. Both are dealing with customer backlash from customers unhappy about higher bills.

In a media conference following the release of the gen-tailer’s results for the first half of the 2018 financial year, Origin boss Frank Calabria described a “very competitive” retail market, that cost more to participate in, and that was boosting customer “churn.”

But high electricity and gas prices, and increased sales of each, were also paying dividends to the company’s bottom line – if not to its shareholders – with an underlying net profit that rose from $173 million to $428 million in the six months ended December 31, 2016.

“We continued to make significant progress on our twin priorities of reducing debt and improving returns,” said Calabria in a statement accompanying the results.

“Origin remains focused on rebuilding the right to grow by reducing organisational complexity and cost, continuing to repair the balance sheet and adopting a disciplined approach to capital management.”

But equally important, he said later at the briefing, is “that we … must be competing at a lower cost and higher productivity than we are today,” in terms of the company’s retail business.

Meanwhile, Origin is striving to strike a similar sort of balance between its fossil fuel generation portfolio and renewables.

Calabria said the company was still committed to rolling out 1GW of new renewable energy between now and 2020 – starting immediately, with around 300MW on track for the next 6 months.

“We’re committed to halving emissions in line with Paris,” he said. “And we’re committed to being out of coal by 2032.

“There’s more to be done, but we’ve made progress.

On coal, Calabria reaffirmed a need to “make sure” coal came out of the Australian power system in “a progressive but steady way.”

“It’s a transition,” he said. “From our perspective, it’s about how we manage that transition without a high cost to customers.”

Calabria also told the briefing that any new investments in, or subsidisation of, carbon capture and storage technology by the Australian government would have no bearing on Origin’s plan to close its Eraring coal plant in 2032.

“It won’t change Origin’s plans to exit Eraring,” he said. “Subsidies are not the right way to go forward.”

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3 Comments
  1. Joe 3 years ago

    Origin exiting Coal by 2032…at least it is quicker than AGL with their Coal exit plan by…2050. But none of this is nearly quick enough. The 1.5 degrees limit to warming is now pretty much non achievable. So a limit to 2.0 degree warming is the target which is no slam dunk. But I love hearing these magic words from the Origin Coal Kissers…”it’s a transition”, “…a progressive but steady way”. Which goes hand in hand with NSW Premier Gladys’ remarks last year that ” we can’t transition out of coal too quickly”. I’m not sure what planet our Origin friend and Premier Gladys live on but we have a climate emergency on our hands and we don’t have time for this…. steady transition game.

    • Jon 3 years ago

      Well said 🙂
      “We’re committed to halving emissions in line with Paris,” Is at least better than our politicians are saying.

  2. MaxG 3 years ago

    Yeah, we are loosing customers, let’s charge the rest a bit more to maintain profits.

    Think about it… almost a billion dollars profit in a year — all that money going into private coffers; imagine how the public would benefit if electricity would have stayed in public hands… but then, prices would not have increased that much either.

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