Origin Energy profit drops on power plant outages, price caps

Power giant Origin Energy's profit has been hit by outages across its coal and gas-fired power plants, new government caps on retail electricity prices and lower average customer usage in the half-year.

The electricity and gas supplier's bottomline profit in the six months to December 31 dropped from $796 million to $599 million, according to its accounts released on Thursday. Stripping out one-off costs, its underlying profit – more closely watched by the market – fell by 11 per cent to $528 million.

Origin Energy’s underlying profit has slumped 11 per cent.Credit:Louie Douvis

Origin chief executive Frank Calabria said the company's retailing division had felt the impact of "price re-regulation" with the introduction of fixed basic energy prices, known as default market offers, and lower electricity usage volumes.

The performance of its generation business was dragged down by a months-long outage following a breakdown at its Mortlake gas power plant in Victoria and outages at the Eraring coal-fired plant in New South Wales.

"Our generation team worked against the clock to return a damaged unit to service at Mortlake power station in just six months, while output at Eraring was lower due to planned and unplanned outages," Mr Calabria said.

"These one-off outages detracted from an otherwise strong operational performance."

Due to the tight power supply in the east-coast energy grid, especially in Victoria, in the lead-up to summer, Mr Calabria said Origin's priority had been ensuring its generation units were available for the summer peak so homes and business could have reliable supply.

Origin reported a strong performance from its liquefied natural gas joint venture, Australia Pacific LNG, in Queensland. Origin's distributions rose 32 per cent to $520 million.

"We reported record production and an increase in profit in integrated gas, on the back of
the continued operational strength of Australia Pacific LNG," Mr Calabria said.

The company on Thursday confirmed its full-year guidance for its energy markets business between $1.4 billion and $1.5 billion in underlying earnings. Its Australia Pacific LNG is expected to make a cash distribution to Origin of between $1.1 billion and $1.3 billion.

Origin said shareholders would receive an interim dividend of 15¢ a share, up from 10¢ a year earlier.

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