AGL’s profits to double as energy company bosses’ salaries skyrocket
ENERGY giant AGL is on track to double its profits to $1.2 billion in two years as its US-imported boss Andy Vesey shuts down coal power stations — pushing up power bills and risking rolling blackouts.
NSW
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WHILE struggling families skimp to scrape together enough money to pay skyrocketing bills for an erratic electricity supply, AGL is set to double its profits to $1.24 billion as its fat cat boss lives it up in a luxury penthouse with sweeping Harbour views.
The energy giant is set to hit the astronomical profit within two years and the company’s US chief executive Andy Vesey obviously enjoys the high life. Mr Vesey is living at the opulent Cove Apartments complex on Harrington St in The Rocks after moving out of a $7.3 million Melbourne mansion in 2013.
Yesterday Prime Minister Malcolm Turnbull took aim at Mr Vesey, whose salary package hit a whopping $6.9 million last year, accusing his company of pressing ahead with the shutdown of the Liddell coal power station in the Hunter Valley to keep electricity prices high.
“Electricity companies obviously prefer electricity prices to be high. That’s when they make a lot of money,” Mr Turnbull said. “The only beneficiaries, frankly, of the recent increases in electricity prices have been the electricity companies.”
A recent analysis by investment bank Citi showed the rapid rise in electricity prices has been extremely profitable for AGL, pushing the company’s forecast earnings 29 per cent higher for 2019 alone.
That would lead to an increase in net profits from $630 million in 2015 to $1.24 billion in 2019, according to the report sent to the bank’s investment clients in April.
“The rise in electricity prices has put AGL in a sweet spot,” it reads.
And last month Macquarie Bank estimated AGL’s profits could soar as high as $1.36 billion in 2020.
Mr Vesey, along with AGL’s directors, is given bonuses as incentives to grow the electricity company’s profits. Last year Mr Vesey, who moved from the US in 2014 to take over the top job at AGL, took home a base salary of $2.27 million, benefits of $250,000 and bonuses of $4.39 million — adding up to a package of $6.9 million.
The move has certainly proved profitable as back home Mr Vesey was paid $US3.08 million ($3.86 million) in his role as chief operating officer at energy grid company AES Corporation.
Despite Mr Turnbull contacting Mr Vesey on Tuesday to press for Liddell to remain open until at least 2027, AGL has repeatedly distanced itself from that possibility.
“AGL … notes that the company has made no commitment to sell the Liddell Power Station nor to extend its life beyond 2022,” the company said in a statement early yesterday morning.
Mr Turnbull’s pointed remarks precede his meeting with Mr Vesey next Monday where the PM will attempt to play “matchmaker” by lining up potential buyers for the Liddell power station, one of which is Delta Electricity. EnergyAustralia has also not ruled out making a bid.
“A thorough due diligence process would need to be undertaken to understand the condition of the plant and the costs before any decision is made by Delta, but we would be prepared to undertake that exercise,” Delta spokesman Steve Gurney said.
The Daily Telegraph understands a second company has also expressed its early interest in purchasing Liddell should it be put on the market.
It follows a damning energy audit conducted by the Australian Energy Market Operator which shows Sydney families face the risk of serious blackouts if the power station — the state’s second-highest capacity generator — does not remain open beyond 2022.
If it shut, it would put the risk of lengthy blackouts in the state as high as 46 per cent, the report shows.
Industry Minister Arthur Sinodinos warned any further rise in power prices would also smash manufacturing and business investment, losing jobs in the process.
“I talk to manufacturers and industrial users of energy very regularly and the message I’m getting is that they’re hanging in there but they’re waiting for the policy settings to be right to give them the certainty to continue,” Mr Sinodinos said.
“One of the biggest turnarounds in the US economy in recent years has been the way their energy balance has shifted from deficit to surplus and led to the on-shoring of manufacturing rather than the offshoring.”
HARD-UP AUSSIES’ DOUBLE TROUBLE
EXCLUSIVE by NATASHA BITA
MONEY-hungry power companies have hit customers with 40 per cent price hikes — double the increase announced in June.
NSW Small Business Commissioner Robyn Hobbs yesterday warned power prices were rising “far more’’ than the expected 20 per cent surge.
“Every single person in Australia will see increases in their electricity bills,’’ Ms Hobbs told The Daily Telegraph. “How is it possible that energy companies make the massive profits they do, and people are really struggling to pay their bills?
“People on low incomes are having to make choices about keeping their heating and power on.’’
Major power companies announced price increases of up to 20 per cent in June, blaming the increasing cost of electricity generation.
But Ms Hobbs said some consumers were being hit with price rises of up to 40 per cent.
Some businesses were now paying more for electricity than for rent, she said, with more than 11,000 in debt to power companies.
And Ms Hobbs warned that some businesses could shed staff, and others might be forced to shut for an extra day a week to cut costs. “Is it tough? You can bet your bottom dollar it is,’’ she said.
The Small Business Commissioner want to force energy companies to read customers’ meters every month, instead of estimating energy use and sending inaccurate bills.
A record 86,327 NSW residents are now on “payment plans’’ to pay bills in instalments, with 24,921 customers in hardship programs.
The NSW government this week increased power rebates for low-income households by 20 per cent.
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