Ian Myles,an analyst at Macquarie,said the increased coal price had left Origin either acquiring coal at a cost of more than $150 per megawatt-hour or buying energy at even higher prices.
“The current ‘black swan’ event has shown a shortcoming of Origin’s hedging strategy,” Myles said. “The crisis has hurt near-term earnings,but does little to long-term value.”
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The news comes as power bills threaten to add to rising cost-of-living pressures across Australia as inflation sits at a two-decade high. The Australian Energy Regulator has confirmed that spikes in the cost of wholesale electricity because of higher fossil fuel prices are set to drive double-digit jumps in household and small business bills across the country within weeks.
So-called “default market offers” – price caps on what retailers can charge households and businesses that don’t take up special deals or bundle utilities bills – would rise in all states across the east-coast electricity grid,the regulator said.
From July 1,default offers will jump by 14 per cent,or $227,in New South Wales;11 per cent,or $165,in Queensland;and 7 per cent,or $124,in South Australia.
In Victoria,where the state’s Essential Services Commission determines its own default offer,the price cap for households will rise by 5 per cent,or $61,a year.
While the global energy crunch is pressuring Origin’s electricity business,the impact will be partially offset by rising prices boosting its natural gas business including its Australia Pacific LNG (liquefied natural gas) joint venture in Queensland,enabling the company to maintain its group-wide earnings forecasts.
“The current high commodity price environment is a net benefit for integrated gas,with higher sale prices more than offsetting higher input prices,including power costs,” Origin said.
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