Origin Energy backs government’s national energy guarantee
Origin says it looks forward to working with the new national energy guarantee, as it called for policy certainty.
Origin Energy chairman Gordon Cairns has backed the federal government’s national energy guarantee and warned that electricity prices are likely to rise further without agreement on long term energy and climate change policy.
Mr Cairns said bringing on new supply would maintain downward pressure on prices and that an investment signal from national policy was a key to encouraging investment in new generation capacity.
“But we urgently need policy certainty,” told the company’s shareholders at an annual meeting in Sydney.
“We cannot wait until 2020 for investment decisions to be made if we are to meet Australia’s 2030 emissions reduction target.
“We look forward to working with governments and energy market bodies to progress the new national energy guarantee announced yesterday, as we continue to focus on the objectives of delivering security of supply, affordable pricing and the necessary reduction in emissions over time.”
Mr Cairns told the meeting that Origin (ORG) had committed to 1200MW of renewable generation investment and planned to lift its share of the portfolio from 10 per cent to 25 per cent by 2020.
Over the past 18 months there had been a commitment to more than 4000MW of new renewable energy projects which would come online by 2020. Forward electricity prices were already starting to fall as a result.
“Encouraging investment in new supply is a critical piece of the puzzle, and we have urged governments to resist intervening with short-term policy and instead focus on getting the long-term energy and climate change settings right,” Mr Cairns said.
Origin Energy chief executive Frank Calabria reaffirmed the company’s earnings outlook. He said the company would continue to reduce debt and improve returns to shareholders after it cut the dividend in 2016-17.
Origin said its energy markets business should deliver underlying earnings before interest, tax, depreciation and amortisation of $1.7 billion to $1.8 billion, up 14-21 per cent on the previous yeaer “provided that market conditions and the regulatory environment do not materially change”.
Production for its share of Australia Pacific LNG should be 245PJ to 265PJ this financial year.
Net debt was expected to fall below $7 billion, following the sale of upstream gas business Lattice Energy to Beach Energy for $1.5bn.
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