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AGL says power prices will remain high

Trevor Chappell  |  10 Aug 2017Text size  Decrease  Increase  |  

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MELBOURNE - [AAP] Energy prices are likely to remain high until there is more investment in power production, and that requires certainty from government energy policy, says industry heavyweight AGL Energy (ASX: AGL).

Australia's second-largest energy retailer says high wholesale electricity prices reflect increased fuel costs and the disorderly withdrawal of coal-fired power stations from the energy market.

AGL chief executive Andrew Vesey says wholesale electricity prices have moderated in recent months, but the energy market needs more investment for wholesale and retail energy prices to really ease.

"Until that happens, we're not going to see the kind of (price) decrease on a sustained level that we expect," Mr Vesey said on Thursday.

He said AGL is already investing in new supply projects to drive down prices, and is willing to invest more when there is certainty on energy policy.

The federal government is still considering whether to adopt the clean energy target recommended by chief scientist Alan Finkel.

"To provide certainty we support the rapid implementation of the Finkel review recommendations in full, including the adoption of the clean energy target," Mr Vesey said.

AGL Energy on Thursday reported an annual profit of $539 million for the year to June 30, up from the prior year's loss of $408 million, which was due to one-off items and accounting adjustments.

The company's underlying profit, which excludes one-off items and accounting adjustments, rose 14 per cent to $802 million--just above AGL's previously issued guidance.

AGL said it benefited from conditions in the wholesale electricity market and the company's own "transformation efforts", which offset higher commodity costs and a reduction in wholesale gas margins.

Wholesale electricity prices have risen sharply in the Australia over the past two years and AGL said it expects to improve profits further next financial year.

It said its underlying profit could surpass $1 billion in the current financial year as its electricity business generates more earnings and margins improve in its gas business.

AGL shares were down 30.5 cents, or 1.2 per cent, at $24.685 at 1315 AEST.

AGL ENERGY SWINGS BACK TO PROFIT

* Annual net profit of $539m, up from loss of $408m

* Revenue up 12.9pct to $12.6bn

* Final dividend up 14 cents to 50 cents per share, partially franked

 

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