EnergyAustralia, one of the country’s largest electricity producers and retailers, blamed “unprecedented conditions”, including supply issues at coal-fired plants, for its $1bn loss in 2022.
The company’s parent, Hong Kong-based CLP, said EnergyAustralia lost $HK5.3bn ($1bn), compared with an $HK83m ($15.66m) shortfall in 2021.
“The Australian electricity market is going through a volatile period of energy transition,” EnergyAustralia said in a statement released on Monday.
Despite this, the company remained “well placed” to take advantage of remaining opportunities even though the exit from fossil fuels will need “significant investment”.
EnergyAustralia was exposed to costly spot prices for electricity and coal because of unplanned outages at its ageing Yallourn power station in Victoria and supply shortfalls from a mine supplying its Mt Piper plant in New South Wales.
To reduce the risks of similar problems, the company will bring forward planned maintenance at Yallourn, taking two of the 370-megawatt units offline this year and the other two in 2024. The cost of the repairs were reported to reach $400m, adding to previous bills, including $85m in 2021 to fix leaks in the Morwell River diversion.
“This will provide the opportunity to address in a targeted way the main causes of forced outages in 2022,” the company said.
Similarly, the 1400mW Mt Piper plant has secured coal from Centennial Coal’s Airly mine, “partially reducing” the supply risk from its dependence on Springvale mine.
EnergyAustralia was not alone in being caught out last winter by shifts in the main national electricity market serving eastern Australia. Delayed repair work – partly caused by Covid disruptions – combined with an early season cold snap that drove up demand, prompting authorities to suspend the market for more than a week.
Still, the planned outages for Yallourn, which itself is slated for closure in 2028-29, underscores the market operator’s warning last week that “urgent” work was needed to bring on more renewable energy to avoid supply shortfalls as coal plants exit.
Local residents of the Lithgow region are also wary EnergyAustralia will shut the Mt Piper plant well before the scheduled date of about 2040.
A spokesperson for EnergyAustralia said the major outages for maintenance were “generally two months in duration, and we have a schedule that balances reliability and energy supply goals”. Work will begin in July at Yallourn’s W3 unit.
“The outages take considerable planning with up to 800 additional people on site working to support the wide range of maintenance tasks that occur during an outage,” the spokesperson said, adding that the market operator AEMO has been alerted of the planned outages.
An AEMO spokesperson said EnergyAustralia had scheduled about 22 outages for Yallourn over the next three years, with the information made public.
The recent AEMO electricity report did not consider the reductions of power from Yallourn “as it is standard practise for participants to scheduled planned outages at times when supply is unlikely to be scarce”.
Bruce Mountain, director of the Victoria Energy Policy Centre, said EnergyAustralia’s shareholders would “be smarting at the loss … at a time that they had sold forward their coal generation and so had to buy back shortfalls [at] extraordinarily high spot market prices”.
“The energy transition will require enormous amounts of capital, and it can be no pleasure to EA’s shareholders to be spending so much money to fix up failing fossil fuel infrastructure that is soon to be closed,” Mountain said.
“The financial result, however, is significantly exaggerated as a result of market-to-market financial losses that have since recovered as spot market prices have continued to decline from their extraordinary levels from mid- to late-2022.”
Separately, EnergyAustralia said it had pleaded guilty in December to three charges under the Victorian Occupational Health and Safety Act relating to the 2018 death of Graeme Edwards, an operator at Yallourn.
“EnergyAustralia again expressed its profound regret and remorse for the tragic and avoidable death of Mr Edwards and acknowledged the impact it has had on his family and his workmates,” it said, adding that sentencing in Victoria’s county court earlier this month resulted in a $1.5m penalty for the company.
Looking ahead, the company said 318,000 of its 2.4 million customers had signed up to its demand management program, PowerResponse, that trims power bills while easing the strain on the grid.
Mountain said the scheme had been “remarkably successful”, with customers offered $2/kWh, more than the company would pay on the spot market to replace the electricity consumption avoided.
“It will be interesting to know exactly what effect this program is having on their business and on the market,” he said.
