Origin Energy promises relief for customers in NSW, South Australia, Queensland

Origin chief Frank Calabria says east coast power prices are at a turning point after three years of continuous rises.

Origin Energy has promised power price relief for customers in NSW, South Australia and Queensland.

Origin Energy chief Frank Calabria says east coast household power prices are at a turning point after three years of continuous rises, and has tipped more price reductions as renewable energy supply continues to be added.

And to make sure NSW and ACT households with Origin don’t get hit by what would should be a final price hike, the company will take a $56 million hit to net profit to keep 2018-19 bills steady, while Queensland and South Australia get reductions.

“It’s a turning point on the basis we are seeing lots of renewables come in still,” Mr Calabria told The Australian.

“I expect more supply over the next 12 months, which is a positive, and sustaining it over time is where the policy comes in — that’s what we want for further signals.”

He said short term supply disruptions could dent this outlook.

“We want policy to guard against what we’ve seen over the last year or two, where you’ve got supply coming out at short notice and the market responding without a clarity of longer term policy.”

Mr Calabria said Origin had passed on all cost reductions in South Australian and Queensland and had taken a hit for NSW and the ACT that would result in a $56m reduction in Origin’s 2018-19 net profit.

“We didn’t really want any customer to have an increase in markets where it hasn’t yet turned, we’ve decided it’s the right thing to do,” he said.

He said it was the first time since 2015 that retail prices had not risen.

Energy Minister Josh Frydenberg welcomed Origin Energy’s move.

The base-rate tariff for Origin residential customers in southeast Queensland will drop by 1.3 per cent next financial year, and by 4 per cent for small business customers. In South Australia, the base-rate tariff will drop by 1 per cent for residences and 1.4 per cent for small businesses. The decision to keep NSW prices steady reflects a decision by the company to absorb a 3 per cent increase in the real cost of supplying electricity.

Mr Frydenberg praised the move, saying: “We are through the worst of it, we have turned the corner when it comes to energy prices.

“I’m very confident that my colleagues and indeed the states and the territories see the National Energy Guarantee as being in the national interest.

“People are sick and tired of the hyper-partisanship which has dominated this issue and what they are interested in getting more of is more affordable and reliable power, and meeting our emission reduction targets, all of which can be achieved through the National Energy Guarantee.”

John Briskin, Origin’s executive general manager retail, flagged even more aggressive reductions if parliament can resolve its energy policy impasse. He urged industry and government to “stay the course” and ensure the Coalition’s National Energy Guarantee is brought to fruition.

“We believe we can drive electricity prices even lower for Australian households and businesses, if we can agree on a long term energy policy to encourage timely investment in new supply to replace the nation’s ageing power stations,” he said in a statement.

The National Energy Guarantee is viewed with scepticism by some Coalition MPs who believe compromising with Labor to deliver an energy policy consensus would deprive the government of a potent weapon in the general election.

Some would prefer greater government intervention in electricity markets, including using taxpayer funds to subsidise a new coal-fired power station.

South Australian Liberal Tony Pasin said Origin’s announcement was the result of strong competition and expects other retailers to follow suit. “I can’t see Australian consumers exercising loyalty to energy companies in circumstances where prices are substantially different.”

Labor Senator Murray Watt said price cuts were a welcome development, but also flagged the need for long-term policy while calling the announcement a good first step.

“They’ve flagged that any further power reductions really depend upon this government coming up with a viable, long-term plan for energy policy and of course we know that’s been the one thing that this government has been incapable of doing up until now,” he told Sky News.