Big three energy retailers to take $2.8 billion in profits, but Energy Minister says it proves new laws are needed

More than $2.8 billion is expected to be funnelled into the coffers of the three biggest energy retailers in the next financial year, analysis reveals.

More than $2.8 billion is expected to be funnelled into the coffers of the three biggest energy retailers in the next financial year, analysis reveals.

Origin, AGL and Energy Australia forecasts reveal profits are expected to almost double compared with an aggregate $1.4 billion reported in 2015.

Federal Energy Minister Angus Taylor said the estimates revealed why the “big stick” legislation was needed to ensure energy companies reduced power bills for consumers.

Mr Taylor said it was no wonder the energy companies were pushing back against the proposed legislation.

“They have been taking record profits from the wallets of hardworking Australians for years — and they don’t want it to end,” Mr Taylor said.

Company and market data shows the three retailers made an aggregate profit of $2.6 billion this year.

The industry maintains that the profit rise follows a decade of losses — when prices were at historic lows and the wholesale electricity market was oversupplied.

It has also raised concerns that divestment will freeze investment and drive up prices.

The government has adopted several recommendations from the consumer watchdog and has proposed divestment powers — if the retailers do not lower prices as part of its big stick approach, which is expected to be put to the Coalition party room tomorrow.

Prime Minister Scott Morrison said in September that although the ACCC didn’t recommend divestment, it was necessary because energy companies only moved when you had a big stick: “So you know, we’ve got to create the power to have that big stick.”

Treasurer Josh Frydenberg said the power would be used in a way that “benefits the consumer” but Liberals are understood to be divided on giving the Treasurer the power to make a company sell investments.

ACCC chairman Rob Sims has previously dubbed divestiture as “such an extreme step”, while Opposition energy spokesman Mark Butler has revealed that Labor would have considered it if it was recommended by the watchdog.

The Australian Energy Council will today release a statement from the business and energy sector urging the government to abandon the plan it says will “discourage badly needed investment” that would drive down prices.

It warns the powers represent “sovereign risk” and would “threaten the economic attractiveness” of Australia, which relies on foreign investment.

“Consumer protections are important and we support ongoing consideration of options to improve existing regulatory regimes,” it states.

Originally published as Big three energy retailers to take $2.8 billion in profits, but Energy Minister says it proves new laws are needed