AGL plugs in to record profits
Investors react positively to AGL's record profits, however it has customers cringing as they continue to ensure electricity price hikes.PT1M53S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2sqi6 620 349 August 28, 2013
Energy group AGL is making record profits from its customers, lifting its gross profit to $200 per account, amid surging electricity and gas prices.
Earlier today, AGL disclosed the gross margin per customer had reached $200.47, up from $194.03 a year earlier. This rise of 3.3 per cent is significantly above the rate of inflation, which has been running at about 2.5 per cent a year over the past few years.
AGL margins came under pressure in the South Australian and Queensland markets due to onerous price controls. In NSW the company expects the government will support full deregulation once a review is completed next month.
Electricity prices have surged.
‘‘There is a certain inevitability that NSW will deregulate the market,’’ AGL chief executive Michael Fraser told analysts this morning.
AGL has pushed hard to boost customer numbers in NSW in particular over the past few years, following its failure to buy any of the three power retailers sold by the NSW government.
Total customer numbers in NSW have hit the target level of 800,000, and while AGL said it will maintain "robust competition", it may become less aggressive in matching price discounts of rivals.
Rising electricity prices along with warm weather had slowed demand growth, although AGL said it expects price rises to slow over the next few years, which could result in demand improving.
At the same time, gas prices could begin to move higher – prices had risen to $9-10 a gigajoule in Queensland in recent dealings, the company said.
Prices in NSW are set to rise sharply over the next few years as long-term supply contracts expire.
AGL said government policy in NSW had forced it to write off the value of gas reserves in NSW by $343 million. Almost half of its reserves near Camden, south-west of Sydney, nearly a quarter of its reserves in Gloucester and all of its reserves in the Hunter valley were now ‘‘sterilised’’.
From October, AGL plans to revamp its customer billing, so that customers can choose whether to pay quarterly, monthly or even fortnightly. This change will apply to all customers, with provision to allow households to read their own meters for billing purposes, Mr Fraser said.