‘Be honest’ on bill shock from new energy

One of Australia’s biggest electricity and gas companies has warned the massive investment required to go green will put upward pressure on power bills.

“A future built on renewable energy with new technology such as electric vehicles, is something to look forward to,” Origin Energy chief executive Frank Calabria told a business event.

“But delivering the energy transition, given the scale of investment required, will undoubtedly create upwards pressure on energy bills.”

Mr Calabria said on Tuesday he feared the rising energy prices could erode community support for the transition to clean energy.

“We must be honest about the likely impact on bills over the short- to-medium-term to reduce bill shock.”

The energy boss said retailers are the highest profile players in the supply chain as issuers of energy bills, but many of the charges are sparked by governments, regulators and transmission providers. 

He urged decision makers to consider what levers are available to ease cost inputs right across energy bills, while providing additional support for those least able to pay.

The benefits of a future energy system that is more aligned with limiting global warming feels “out of reach and out of step” with what many customers are experiencing today, Mr Calabria said.

He said homes and businesses around the world are grappling with the same, significant challenges in accessing secure, reliable energy.

“While the impacts here are not nearly as acute as in the United Kingdom and Europe, we are certainly not immune,” he said.

“Australian homes and businesses are already feeling the impact of rising energy prices, with more to come.”

More supply remains key to solving gas challenges on the east coast of Australia, he said.

“Given the lag in any new supply coming online, we need to take steps now to encourage new sources of supply near southern markets, where the traditional fields are in decline and most gas demand exists.”

Origin last month upgraded its outlook as gas earnings surge on global demand, and with Australian power bills skyrocketing as it passes on higher electricity generation costs to consumers.

Origin has also opened its books to Brookfield Asset Management, which earlier this month made an $18.4 billion tentative takeover offer.

If successful, it would underpin the supply of gas to domestic and global markets for decades to come.

Brookfield, one of the world’s biggest alternative investment management companies, plans to acquire Origin’s energy markets business and spend $20 billion on renewable energy and storage and position Origin as Australia’s leading “greentailer”.

MidOcean Energy, a gas company, would take over Origin’s gas business under the deal, which would include gas fields and a share of the Australia Pacific liquefied natural gas joint venture export project in Queensland.

MidOcean Energy last month agreed to acquire stakes in four LNG projects in Australia from Tokyo Gas for $2.15 billion.