The electricity crisis caused EnergyAustralia to suffer a whopping $1.6 billion loss for the first half of the year as the company battled with “extreme” conditions in the market.
The Melbourne-based company, owned by Hong Kong’s CLP Group, also warned that household power bills would continue to face pressure due to ongoing volatility in global fuel prices.
The mega loss experienced by the third biggest energy retailer was in stark contrast to last year when it recorded a $146 million profit.
The chief executive of parent company CLP Group, Richard Lancaster, said it would be “proactive” in seeking out partnerships for EnergyAustralia to transition to low-carbon energy.
Six weeks before the loss was reported, the company had issued a profit warning to the market.
On Monday, it revealed its earning had taken a huge hit as it was forced to buy up expensive supplies to meet customer demand amid “unprecedented market volatility”.
Shortfalls in energy production from its Yallourn and Mount Piper coal plants was one of the main reasons it had to shell out more money for supplies.
Its Yallourn plant in particular was hit by delays due to a fire on a coal conveyancer system and recurring maintenance issues, according to CLP Group.
However, the outlook on pricing continued to be bad, according to the company.
“Volatility in spot prices in response to weather variations and changes in supply and demand looks set to continue amid the net-zero transition in Australia,” CLP Group said.
However, EnergyAustralia’s competitors, AGL Energy and Origin Energy, have also sounded the alarm about profits due to issues such as coal power outages and supply problems at some plants.
Mr Lancaster said while the last six months were not representative of the market in general, volatility was something to expect in Australia.
Last month, the credit agency Standard & Poor (S&P) warned EnergyAustralia could be at risk of breaching one of its loans and suggested it may need financial assistance from its parent company.
EnergyAustralia signed a $1 billion credit facility in July to provide a bigger financial buffer for its operations, with S&P giving it a negative outlook due to its weakening credit position.
In its half yearly report, EnergyAustralia said it would “continue to strengthen its capital structure to fund its current and future investment needs, providing the reliable supply needed to support customer demand and the transition to a lower-carbon power market”.
But other retailers going under – with a spate collapsing including Byron Bay community-owned electricity provider Enova, Victorian provider Electricityinabox, LPE, Discover, Elysian and Future X – was a win for EnergyAustralia, which saw its customer base leap to 2.45 million.
EnergyAustralia said it had plans in place for the rest of the year to ensure electricity supply.
“Additional short-term coal and gas purchases have been made to enable EnergyAustralia’s power stations to support customers and the broader energy market in the second half,” CLP said.