Energy: Christine Corbett ready for tough gig running AGL’s ‘clean co’

Christine Corbett says AGL Australia wants ‘to get on the front foot’ and ‘have a credible pathway to net zero’. Picture: Aaron Francis/The Australian

If all goes to plan, by mid-next year Christine Corbett will have her feet under the desk as chief executive of AGL Australia, a new energy retailer.

Under huge pressure from the global energy transition, the gentailer AGL Energy will demerge into two companies: Accel Energy will be a generator holding the ageing coal-fired power stations and AGL Australia the retail business holding clean energy assets.

But anyone thinking that the job running “clean co” for AGL’s chief customer officer will be ­either a walk in park or safe from climate activists is mistaken.

To succeed, Corbett will need to keep and grow the 4.5 million customer base, supply customers with reliable power as the National Energy Market reforms and grow margins while weaning the business off coal-fired power over the next five years. And do it all after being handed a capital structure that may well need more support from the market.

In her first interview, Corbett says customer demand, technology developments and sustainability are the criteria that will inform her business decisions.

“We are going to be like a start-up. We are the brand new company that is being spun out,” Corbett says. “We are going to lead with customers at the forefront but also accelerate both ­customers, business and the community on their decarbonised journey.”

Corbett describes AGL Australia as a retail energy business with a twist. “The twist is we will have all the renewable assets and gas, that flexible firming and storage capacity,” she says. “We will stimulate demand through our customer base and have a supply portfolio that matches our supply to that demand.”

This, she says, is an important risk management tool to drive value because at times of peak ­prices AGL Australia will have its own assets to help protect it.

The incoming CEO welcomes the OECD report that dials up the pressure on Australia and carbon emissions. On listing, AGL Australia will be Scope 1 and Scope 2 carbon neutral, which covers ­direct emissions and emissions from purchased electricity. Great to have, says Corbett, but increasing activism around Scope 3 emissions in the supply chain is not far away. “We want to get on the front foot and work with the new board and management team to have a credible pathway to net zero.”

That is not simple. AGL Australia will not be free of Accel.

Accel will have a 15-20 per cent shareholding in AGL Australia and, more importantly at the start, Accel’s coal-fired power is where it will source much of its electricity through an offtake agreement that continues until 2027.

“We have deliberately phased that across three tranches so that we can provide customers with ­security of supply in the near term, but we are deliberately stepping it down so it gives both organisations that flexibility when the ­decarbonisation journey accelerates,” Corbett says. “We can then look at what are other alternate sources of supply.”

AGL Australia’s own supply includes hydro, wind and solar assets, and its 20 per cent ownership of the renewable investor PowAR will give it access to the development pipeline of Tilt Renewables.

Corbett says she is comfortable with an obligation to take coal-fired power from Accel to 2027. “At the moment, 30 per cent of Australia’s energy comes from renewables, so 70 per cent of Australia’s energy comes from coal. Five years ago 14 per cent came from renewable energy so it has increased, but it still has a way to go. You have to have a plan with ­security of supply for customers but also flexibility that you can look at alternatives.”

Corbett’s performance in two years as chief customer officer at AGL is impressive. Customer complaints are down 66 per cent in the two years and digitally active customers have grown from 38 per cent to 50 per cent. The company’s NPS score, which reflects customer trust and satisfaction, has swung from -11 to +4.9, the first time it has been positive. And the AGL services to customers have grown by 500,000.

AGL Australia’s incoming chair Patricia McKenzie says Corbett has developed a highly capable team and her experience in creating a leading multi-product energy retailing business will be key.

But the last 12 months has been brutal for energy retailers. Cheap renewables have flooded the market, collapsing wholesale power prices, and AGL Energy’s share price has plummeted 60 per cent this year. AGL Australia earnings have also fallen over the last two years.

Default market offers have capped retail prices, but Corbett says AGL has been able to adapt and she has no fear of government interventions. “It is what it is,” she says. “That has led to margin compression. That has also led to benefits to customers in pricing as was intended.”

Importantly, the demerger ­allows each business to lobby for very different outcomes as consultation starts on reform to the National Energy Market. “On Accel’s side it is their role in the energy transition and energy security and supply,” Corbett says. “For AGL Australia, we want to lead with the voice of the customer. What policies and frameworks do we need for decentralised energy, for the acceleration of electric vehicles? What do we need in batteries at a household and community level?”

Corbett says it is too early to say how much AGL Australia will be in the proposed capacity market. Gas could offer an opportunity.

Asked if she agreed with some renewable energy companies that a capacity market would delay the exit of coal, she says: “If it was a simple issue and answer, it would be solved. What is the impact on the customer and the impact on business is where AGL Australia will be involved in discussions and how that plays through to customer pricing.”

In the demerger, Corbett will keep AGL’s chief financial officer, Damien Nicks, but important to the energy trading side (and the dark art of intercompany transactions) she loses chief operating ­officer Marcus Brockhoff, who heads to Accel.

An interview process is under way for the key role. Trading, says Corbett, will also be very different. “At the moment AGL is long energy generation. It’s going to be a really interesting role for our traders when you are short, rather than long. There are going to be different contracts and derivatives we will have in place.”

In a 17-year career at Australia Post, Corbett rose to chief customer officer and also interim CEO. She oversaw the move from a letters to e-commerce business. It was the transformation in energy that attracted her to AGL. Contrary to reports, she was not lured by former Aussie Post chairman and AGL director John Stanhope, but by head hunters.

Central to Corbett’s growth strategy is the new offering to customers, and she has ambitions to be the go-to aggregator of services. “We are growing power but we have also diversified into broadband and mobile services,” she says. “They are the new essential services of the future. It has got to be effortless, easy, and a telco and energy probably haven’t had those merits in a customer’s eyes.”

She says the offer of a one-stop shop for customers if they bundle with AGL is already resonating well with customers and business is growing at over 1000 new telco services every week.

Already a force in the home movers market, AGL has added insurance. The battle between aggregators is just beginning with ­giants like Telstra now offering services bundled with energy. But AGL Australia is not about to become a telco. “It is to say to energy customers, how do we make it more convenient and simple for you and give you value by you doing your business with us?”

Ever bigger solar panels, batteries, electric vehicles and digital means the customer must become part of the system. “How do you allow customers to understand what they are generating, when can they export, when can they change their behaviour and turn off their appliances at times of peak demand, but give them back immediate value as part of that?” Corbett says.

At next week’s AGM for the company, Corbett expects shareholder interest in both Accel and AGL Australia’s path to net zero.

AGL sees no need for a capital raising ahead of the demerger and is confident it will deliver investment grade ratings for AGL Australia and Accel. Others in the market believe Corbett and her chair, Patricia McKenzie, must be ready for everything from capital raisings to a takeover bid from a Shell or a telco.