Little relief for consumers as Origin Energy posts billion-dollar profit

Higher gas and electricity costs have seen Origin Energy more than doubling its half year profits.

Higher gas and electricity costs have seen Origin Energy more than doubling its half year profits. Photo: AAP

Leading gas and electricity company Origin Energy has surged into the black with a billion-dollar profit, but it expects little respite for cash-strapped customers in the year ahead.

Australia’s biggest energy generator and retailer on Thursday reported a net profit of $1.06 billion for FY23 as one of the largest suppliers to the east coast domestic gas market.

“Gas supply continues to be a source of strength,” CEO Frank Calabria told an investor briefing.

Spot market prices were lower for electricity and gas in the second half of the financial year, and a coal price cap also reduced fuel costs for electricity generation.

Mr Calabria said higher electricity tariffs from July 1 will make up for higher operating costs from the previous year, along with the government-imposed coal price cap that runs until mid-2024.

Chief financial officer Lawrie Tremaine said higher bills, cost-of-living pressures and slower collection of overdue accounts had caused an increase in bad and doubtful debt expenses of $74 million.

ACTU assistant secretary Joseph Mitchell said the massive profit was s a perfect example of why energy and utility companies rank highly in submissions to its Price Gouging Inquiry.

“Australians will find it hard to swallow that Origin can post such an enormous increase in profits especially when we hear heartbreaking stories of people going without heating, hot water or sacrificing lighting their homes at night just to be able to make ends meet,” Mr Mitchell said.

“Customers will rightly wonder how these big energy companies can justify such large profits, especially as Origin reports that it is due partly to the cost of purchasing energy for them is fallen, and they have failed to promptly pass on those savings to consumers,” he said.

Origin said it had “significantly increased” support for customers and was targeting $45 million for those in hardship in 2023, up from $30 million in 2022.

The profit for the financial year ended June 30 compared with a loss of $1.43 billion a year earlier on impairment charges.

A 20 per cent stake in the United Kingdom’s second-largest energy retailer, Octopus, has also allowed Origin to profit from Europe’s energy crisis.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA), a measure of core company profitability, surged to $3.12 billion from $2.11 billion.

Underlying profit rose to $747 million on higher commodity prices, record revenue for Australia Pacific LNG, and stronger operational performances across the group.

But greenhouse gas emissions rose four per cent as Origin turned up Eraring, which is Australia’s largest coal-fired power plant, to meet demand.

Mr Calabria confirmed 50-year-old Eraring in NSW remains scheduled for closure as soon as August 2025.

Shares in Origin rose 13 cents or 1.6 per cent to $8.49 by midday AEST, after it upgraded earnings expectations for FY24.

Origin has tripled the number of smaller assets under its control in a “virtual power plant” to more than 270,000, as homes and businesses plug in electric cars, solar energy systems and other devices.

“It’s bigger than the largest single unit of generation in the market,” Mr Calabria said.

Energy market regulators expected these distributed energy sources to form an important part of Australia’s future renewable energy system.

Mr Calabria warned the energy transition will require a “staggering” scale of investment, as Brookfield prepares to spend $30 billion on building renewable energy generation and storage in Australia.

He warned that further government interventions would discourage investment, and called for a capacity mechanism agreed by federal and state energy ministers to include support for new gas generation.

Mr Calabria said Origin has been “well supported” by the federal government on a Hunter Valley hydrogen project with partner Orica, and is in talks with the NSW government.

A fully franked final dividend of 20 cents per share was declared, bringing total dividends for FY23 to 36.5 cents per share.

– With AAP

Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.