EnergyAustralia profit dives amid Yallourn, price plunge
EnergyAustralia’s operating earnings fell 30pc as lower power prices, a jump in gas costs and Yallourn outages hit its bottom line.
EnergyAustralia, the nation’s third largest electricity company, saw its first-half earnings crash by nearly a third amid flooding at its Yallourn coal plant, with market conditions to remain tough due to lower wholesale power prices and a jump in gas costs.
The power giant’s operating earnings fell 30 per cent to $HK837m ($146m) for the six months to June 30 from the same period a year earlier due to a slump in power prices, higher gas costs and a hit from its Yallourn coal plant which cut output due to flooding.
Its contribution to parent company CLP’s earnings was a loss of $31m following the $185m settlement of litigation after the sale of Victoria’s Iona gas storage plant to QIC due to capacity issues and $65m pre-tax for safeguarding Yallourn during the recent flooding event.
Overall underlying earnings fell 18 per cent to $363m and newly appointed chief executive Mark Collette pointed to a tough second half of the financial year.
“Market conditions in the second half are anticipated to remain challenging with intense retail competition and lower realised wholesale electricity prices – coupled with higher gas costs – than in prior periods,” EnergyAustralia said.
While wholesale electricity prices jumped in the second quarter of 2021, they remained at rock bottom levels for much of the year after falling by up to half between mid-2019 and early 2021 amid a flood of renewables and weaker demand.
Its rivals, Origin Energy and AGL Energy, are also enduring a tough period of trading and higher fuel costs. Origin on Friday revealed it would take a $2.25bn hit to the value of its business in its annual financial results as wholesale electricity prices tumble, with the energy major warning it faces “significant headwinds” going forward.
EnergyAustralia in May approved an expansion of its existing Tallawarra gas power plant in NSW’s Illawarra region with a 300MW facility with works to start later this year.
Maintenance at its major power stations will also be conducted in the second half of the year.
“In the second half we will progress major maintenance programs at our Yallourn, Tallawarra and Mt Piper power stations, ensuring they will be there for customers during the summer peak,” Mr Collette said. “In addition, the essential work of relieving pressure on the Morwell River Diversion at the Yallourn mine continues, so we can complete a damage assessment and determine what critical repairs can be made.”
Mr Collette took over from Cath Tanna who stepped down on July 1 after seven years in the top job.