Following a solid half-year result for AGL’s shareholders, I wanted to take the opportunity now we’re through the results season, to discuss how we’re investing our money for the benefit of our shareholders, customers and the community.
As reported in our first half FY19 result, our Underlying Profit was up 10% on same period in FY18. While a lot of factors contributed to this, this result can be largely attributed to higher wholesale prices on the back of increased input costs for coal and gas, and supply constraints.
But what does this mean for energy prices?
The reality is that across the sector, high wholesale prices and ongoing energy policy uncertainty continues to place upward pressure on electricity prices.
Despite these pressures, we are continuing to invest in our existing generation infrastructure and in new projects, as well as delivering lower standing electricity prices for household and small business customers and expanding loyalty and hardship programs. However, more could be invested with greater energy policy certainty.
Longer term though, investing in additional energy supply is the best way to improve energy reliability and affordability.
Investing in existing generation infrastructure
We're investing more in the availability of our key thermal power generation sites, because the continued availability and reliability of these generation assets is essential to the community's confidence in the energy system as it transitions.
Additionally, the planned maintenance and efficiency upgrades in our existing generation infrastructure serves to increase the output of these generation sites, but not the emissions.
Investing in new projects
There are currently $1.9 billion of new energy supply projects under development. We have another $1.5 billion of projects subject to feasibility, including the pumped hydro project at Bells Mountain in New South Wales.
Cutting prices and introducing safety net discount
In the last year we have reduced our prices and introduced a safety net discount for our Standing offer customers. In July 2018, AGL cut electricity prices across NSW, Qld and SA, and from 1 January we rolled out gas and electricity price reductions in Victoria.
Assistance for customers experiencing hardship
Last year we introduced new measures to identify and support hardship customers. In our FY18 financial results, we also announced $50 million of debt relief for hardship customers, a $6 million Energy Literacy fund to support and empower vulnerable customers and a $2 million program to provide dedicated assistance for small businesses.
In addition to our existing hardship policy across NSW, Qld and SA, we introduced a new hardship policy for our Victorian customers, Payment Support, in response to the Essential Services Commission’s (ESC) new Payment Difficulty Framework, which commenced 1 January 2019.
The program offers a range of assistance measures including access to financial counsellors, guaranteed discounts, payment plans, depending on circumstance placing bill payments missed on hold, energy reviews, audits and tips, and protection from disconnection.
There is still more to do.
In this period of high energy prices, policy uncertainty, and technology transition, making energy more affordable for our customers, particularly those struggling to pay their bills, is a top priority for AGL. We are going to keep working on this.
AGL’s role as an essential service provider to more than 3.6 million Australian homes and businesses means we have a responsibility to address not just the ‘now’ in terms of prices and hardship support, but also plan for the future by investing in increasing supply to help energy affordability longer-term.