Utilities bring in new blood, still clinging to fossil fuels

Less than 24 hours after AGL Energy announced the retirement of its chief of eight years, Michael Fraser, another Australian gentailer, EnergyAustralia, has announced the appointment of its new managing director, Catherine Tanna, effective 1 July.

Tanna – whose extensive experience in the energy sector has been centred around gas and oil, with roles at BG Group, BHP Billiton and Royal Dutch Shell – will succeed Richard McIndoe, who announced his retirement as managing director in December 2013, after eight years in the role.

In a company statement announcing Tanna’s appointment, EnergyAustralia chairman Graham Bradley lauded McIndoe’s stewardship of the company, most notably his part in the “significant expansion” of the company’s operations from a stake in the Yallourn power station to “one of the top three integrated energy companies in Australia.”

As we wrote in February, however, it has not been all smooth sailing, the energy company suffering massive losses of $350 million for calendar 2013 after slashing the value of its Yallourn brown coal generator, as well as some of its gas-fired generation assets.

The write-down came as the company, owned by Hong Kong based CLP Holdings, returned a 2013 profit of just $18 million (down from $236 million in 2012) from its portfolio of coal and gas generation and its large retail customer base – a result it blamed mostly on an “unprecedented” fall in demand, and the popularity of solar PV.

Not surprisingly, EnergyAustralia has also been a steadfast opponent to the renewable energy target, which it hopes will be halted or watered down as a result of the current Abbott government review. McIndoe has become infamous for his repeated threats that the “lights would go out” if carbon policies were pursued.

“The over-supply of electricity generation, aggravated by a rush to build renewable energy projects to meet Australia’s Renewable Energy Target, is an industry-wide issue,” EnergyAustralia CEO Richard Lancaster said, then, in a statement. “It may take some years for the supply and demand situation to return to balance and this will require the closure of older, less competitive generation facilities.”

Tanna, who will move to Melbourne for the new job, says it is an exciting time to lead the business, as it adapts to the “significant change” currently affecting energy markets.

The shape this adaptation will take remains to be seen. A results statement from the company in February said its generating assets were supported by brown coal reserves, black coal supply contracts and development options, long- term gas contracts and gas storage operations.

“There is considerable strength in our underlying portfolio,” EnergyAustralia said, “which is well diversified by geography, fuel type and operational mode. This allows us to effectively manage opportunities and risks across our portfolio in response to market conditions.”