Origin Energy Explained

Origin Energy Ltd
Type:Public
Industry:Energy
Foundation:February 2000, but parts of the business date from the 20th century
Location:Barangaroo
Sydney, New South Wales, Australia
Key People:Frank Calabria (CEO) (MD)
Products:Electricity, natural gas, solar panels, LPG, hot water, heating and cooling, electric vehicle charging, broadband
Revenue: A$12.097 billion (2021)[1]
Net Income: A$ billion (2021)
Owner:AustralianSuper (17%)

Origin Energy Ltd is an ASX listed public company with headquarters in Sydney. It is a major integrated electricity generator, and electricity and natural gas retailer. It operates Eraring Power Station, Australia’s largest coal-fired power station, in New South Wales, which it plans to close in 2025.[2] [3] As of 2024, it plans to "minimise" its ownership of wind and solar power, to boost investor returns.[4] It owns 20% of Octopus Energy, a UK renewable energy retailer.[5]

History

Origin Energy was formed 18 February 2000, as a result of a spin-off from Boral.[6] SAGASCO (formerly known as the South Australian Gas Company) became part of Origin Energy as part of the demerger.[7]

Between 2001 and 2002, Origin acquired a Victorian electricity retailer licence from distributors Powercor and CitiPower. In 2004, the SEAGas pipeline was completed, linking the Victorian and South Australian gas markets. During this time, Origin obtained 50% interest in the Kupe Gas Field and Edison Mission Energy's 51.4% interest in New Zealand's Contact Energy. Origin sold its 53% shareholding in Contact Energy to the market in 2015.[8]

On 27 November 2006, the Government of Queensland announced the sale of Sun Retail, the former retailing arm of Energex to Origin for $1.202 billion.[9]

On 15 December 2010, Origin Energy announced that it would purchase the retail divisions of Country Energy and Integral Energy from the Government of New South Wales, at a total cost of A$3.25 billion,[10] [11] as well as entering a GenTrader agreement with Eraring Energy (in which Origin supplies fuel, pays certain charges, and can dispatch and sell electricity output, while Eraring Energy owns, operates and maintains the power stations). The transaction was completed on 1 March 2011.[12]

In June 2022, it was announced that Origin had been fined $17 million for breaching its obligations to customers experiencing hardship and payment difficulties.[13]

In August 2022, the company announced a goal for net-zero direct and indirect emissions by 2050.[14]

In November 2022, Origin received a takeover offer from a Brookfield Asset Management and EIG Global Energy Partners consortium for .[15] [16] Origin agreed to the offer in March 2023, which sees its energy market business owned by Brookfield and its partners, while EIG's MidOcean Energy owns Origin's integrated gas business.[17] In October 2023, the takeover was approved by the Australian Competition & Consumer Commission.[18] The acquisition was terminated in December 2023 after Origin shareholders led by its largest investor, AustralianSuper, opposed the deal, failing to meet the required 75% threshold.[19]

Core business

Natural gas exploration and production

The company's portfolio includes the Bowen and Surat Basins in Queensland and the Browse Basin in Western Australia. In 2017, Origin sold its subsidiary Lattice Energy and its conventional upstream oil and gas business to Beach Energy for $1,585 million.[20]

Australia Pacific LNG, Queensland, Australia

Australia Pacific LNG (APLNG) is an incorporated company owned by Origin Energy, US giant ConocoPhillips and China's Sinopec.[21] The project consists of development of Australia Pacific LNG's gas fields in the Surat and Bowen Basins, construction of a 530 km gas transmission pipeline from the gas fields to an LNG facility on Curtis Island and construction of an LNG facility on Curtis Island.[22]

On 26 October 2017, gas producer and exporter APLNG entered into a sales agreement with Origin Energy, to supply 41 petajoules of gas under a 14-month contract starting 1 November. The contract brings the company's total commitment to 186 PJ for 2018, representing almost 30% of Australian east coast domestic gas market demand.[21]

Energy retailing

Origin has approximately 4.217 million customers, servicing both large energy customers and the residential and small business market.[23]

Electricity generation

Origin operates is able to generate 6,010 MW of electricity capacity. This represents approximately 13 per cent of power generation capacity in the National Electricity Market.[24]

Power station[25] State Location Capacity MW Peak/base Commissioned FuelNotes
Queensland 644 Baseload 2010 coal seam gas from the Surat Basin
Roma Power Station Queensland 80 Peaking 1999 Gas built by Boral[26]
Victoria 566 Peaking 2012 Otway Basin gasLargest gas-fired power station in Victoria
South Australia 80 Peaking 2000 Natural gas
South Australia 224 Peaking 2000 (enlarged in 2009) Gas
New South Wales 664 Peaking 2009 Gas
New South Wales 2880 Baseload 1982 Coal Australia's largest power station
Queensland 423Peaking 1999 Kerosene North Queensland's largest power station. Open-cycle gas turbine
Shoalhaven Hydro Pump Storage Scheme New South Wales 240Peakingtwo pumped storage hydropower stations Water
Osborne Cogeneration PlantSouth Australia 180Baseload and peak jointly owned by Origin and ATCO Power
Worsley Cogeneration PlantWestern Australia 60provides steam and power to the Worsley Alumina Refinery. Jointly owned by Origin and Verve Energy
Victoria 120gasIn partnership with Places Victoria, Australia's first urban distributed energy precinct
Bendigo and Ballarat Solar ParksVictoria 0.300 2009Solar generate a total of 710 MWh of power per year

Controversies

Whistleblower allegations

In January 2017, The Guardian reported allegations of whistleblower Sally McDow, a former compliance manager at Origin. She claimed that the company had ignored various wellfield integrity problems, including failing to maintain hundreds of wells across Australia and New Zealand, failing to seal wells after their active lives and failing to report incidents internally or to the appropriate regulators. She also described a culture of bullying and harassment within the organisation. She said that she had advised the CEO at the time, and Grant King (then President of the Business Council of Australia) but that King did not want the incidents reported. He allegedly stated that the incidents could be used by opponents of the unconventional gas industry to delay or halt current or future projects. Origin denied the allegations.[27]

Beetaloo Basin fracking

Origin was approved by the Northern Territory government to start fracking in August 2019[28] and drilling commenced in October 2019.[29] Fracking began in September 2020 following a six-month COVID-19 induced stand down.[30] Origin has postponed production at their Kyalla well site to the second half of 2021 due to the COVID-19 pandemic.[31]

Concerns were expressed by local officials on the fracking operation, fearing that it could affect their ability to get groundwater and stating the local officials did not fully understand the contracts they were signing with petroleum companies. Accusations that Origin did not consult with traditional landowners before starting their planned exploration[32] were refuted by the Northern Land Council which stated it understood the text in the contracts and consulted with traditional Aboriginal landowners.[33] Origin stated that it conducted multiple checks when installing a well and that fracking stops if a check fails.[34]

Origin divested from projects in the Beetaloo Basin in the Northern Territory in 2022.[35]

Misleading information and prohibited fees

In December 2020, Origin was fined $126,000 after the Australian Competition & Consumer Commission issued an infringement for misleading information regarding price increases in a letter sent out to Victorian customers in December 2019. Origin stated in the letter that electricity prices were changing because of the Victorian Essential Services Commission's increase to the Victorian Default Offer, an unrelated price set by the Essential Services Commission. However, the ACCC stated that the price increase was entirely Origin's choice and they chose to increase prices.[36]

In October 2021 Origin was fined $5 million for charging 22,371 customers prohibited exit fees totaling $489,774. Origin received complaints about the fees in 2018 but continued charging them until 2020. The Essential Services Commission stated “Origin Energy knew at all times about the changes in the law banning exit fees and they even reviewed 19 different contract templates but didn’t remove the exit fees”. By October 2021 fewer than half the wrongly charged exit fees had been reimbursed.[37]

Pollution

In September 2022 Origin Energy pleaded guilty to releasing nearly 800,000 litres of polluted water from its coal seam gas operations in Queensland’s Western Downs region, north-west of Brisbane.[38] [39] According to the Department of Environment and Science, heavy rain caused water to overflow from coal seam gas tanks into a nearby waterway, including a landholder's dam.

External links

Notes and References

  1. Web site: Annual Report 2021 - Origin Energy. 6 May 2022. 23 March 2022. https://web.archive.org/web/20220323044341/https://www.originenergy.com.au/wp-content/uploads/annual_report_fy2021.pdf. live.
  2. Web site: 2023-04-11 . Brookfield's positive Origin Energy transition . 2023-09-11 . Australian Financial Review . en . 23 October 2023 . https://web.archive.org/web/20231023083719/https://www.afr.com/companies/energy/brookfield-s-positive-origin-energy-transition-20230411-p5czix . live .
  3. News: Toscano . Nick . Foley . Mike . Origin Energy to bring forward closure of Australia's largest coal-fired power plant . 18 February 2022 . Sydney Morning Herald . 17 February 2022 . 17 February 2022 . https://web.archive.org/web/20220217220718/https://www.smh.com.au/business/companies/origin-energy-to-bring-forward-closure-of-australia-s-largest-coal-fired-power-plant-20220216-p59x50.html . live .
  4. Web site: 2024-06-12 . Origin Energy to trim green assets to boost returns . 2024-07-13 . Australian Financial Review . en.
  5. Web site: Gottliebsen . Robert . 2023-10-24 . We risk getting out of global transformation too early . 2023-10-24 . The Australian.
  6. Web site: Our history. 17 December 2020. Origin Energy. 17 December 2010. 24 February 2015. https://web.archive.org/web/20150224044433/http://www.originenergy.com.au/233/History. dead.
  7. Web site: Origin Energy Ltd Form 20-F/A (Amended Annual and Transition Report). 2019-02-19. 23 October 2023. https://web.archive.org/web/20231023083721/https://barchart.websol.barchart.com/?filingid=2386621&module=secFilings&override=1&popup=1&symbol=OGFGF&type=CONVPDF. live.
  8. Origin Energy sale of Contact completed. 5 August 2015. Contact Energy. dead. https://web.archive.org/web/20160123015441/https://contact.co.nz/cenergymedia/contactenergy/files/pdfs/corporate/cen-origin-energy-sale-of-contact-completed.pdf. 23 January 2016.
  9. New dawn for Qld energy market . 1 February 2007 . Energex . 16 June 2014 . dead . https://web.archive.org/web/20070208230443/http://www.energex.com.au/media_centre/asp/media_release_display.asp?id=1363&index=0&archive=False . 8 February 2007 .
  10. Web site: Acquisition of New South Wales Energy Businesses. December 2010. Origin Energy. 13 October 2017. 19 July 2017. https://web.archive.org/web/20170719220259/http://reports.originenergy.com.au/2011/shareholder/operational_review/acquisition_of_new_south_wales_energy_business/. live.
  11. Web site: Origin buys NSW power assets for $3.25b. 2010-12-14. The Sydney Morning Herald. en. 2019-02-19. 20 February 2019. https://web.archive.org/web/20190220063259/https://www.smh.com.au/business/origin-buys-nsw-power-assets-for-3-25b-20101215-18x98.html. live.
  12. Origin completes acquisition of Integral Energy and Country Energy retail businesses and enters binding GenTrader arrangements with Eraring Energy. 1 March 2011. Origin Limited. 10 April 2011. 2 April 2011. https://web.archive.org/web/20110402091853/http://www.originenergy.com.au/news/article/asxmedia-releases/1271. live.
  13. News: Harmsen . Nick . 29 June 2022 . Federal Court orders Origin Energy to pay $17 million penalty over breaching hardship obligations . . 24 October 2023 . 31 October 2023 . https://web.archive.org/web/20231031121609/https://www.abc.net.au/news/2022-06-29/origin-energy-ordered-to-pay-17-million-dollar-penalty/101193406 . live .
  14. News: 2022-08-26 . Australia's Origin Energy sets sights on net-zero emissions by 2050 . en . Reuters . 2022-09-13 . 13 September 2022 . https://web.archive.org/web/20220913203735/https://www.reuters.com/business/sustainable-business/australias-origin-energy-sets-sights-net-zero-emissions-by-2050-2022-08-26/ . live .
  15. News: Origin Energy fields $18b takeover offer from Brookfield . 10 November 2022 . Toscano . Nick . . 10 November 2022 . 10 November 2022 . https://web.archive.org/web/20221110010703/https://www.smh.com.au/business/companies/origin-energy-fields-18b-takeover-bid-from-brookfield-20221110-p5bx1u.html . live .
  16. News: Origin Energy bidders ready to sign on the dotted line . 10 March 2023 . Macdonald . Anthony . Thompson . Sarah . Sood . Kanika . . https://web.archive.org/web/20230310212002/https://www.afr.com/street-talk/origin-energy-bidders-ready-to-sign-on-the-dotted-line-20230309-p5cqw0 . 10 March 2023 . live.
  17. News: Marchese . Adriano . 27 March 2023 . Brookfield Renewable Enters Australian Renewable Energy Market with Origin Energy Deal . . https://archive.today/20230402020949/https://www.wsj.com/amp/articles/brookfield-renewable-enters-australian-renewable-energy-market-with-origin-energy-deal-ee00bb1 . 2 April 2023 . live.
  18. https://www.smh.com.au/business/companies/accc-clears-canadian-fund-s-18-7b-takeover-of-origin-energy-20231010-p5eb1x.html ACCC clears Canadian fund's $18.7n takeover of Origin Energy
  19. News: Murdoch . Scott . Jackson . Lewis . 2023-12-04 . Origin investors reject $10.6 billion Brookfield bid, company open to other funding . en . Reuters . 2023-12-13 . 11 December 2023 . https://web.archive.org/web/20231211013203/https://www.reuters.com/markets/deals/origin-investors-reject-brookfields-106-bln-bid-proxy-votes-2023-12-04/ . live .
  20. Origin agrees to sell Lattice Energy for $1,585 million. 28 September 2017. Origin Limited. 1 May 2020. 25 March 2021. https://web.archive.org/web/20210325172635/https://www.originenergy.com.au/content/dam/origin/about/investors-media/170928%20ASX%20release%20Origin%20agrees%20to%20sell%20Lattice%20Energy.pdf. live.
  21. Web site: APLNG joint venture to boost gas supply to east coast. Cole. Latimer. 26 October 2017. The Age. 28 September 2020. 18 October 2018. https://web.archive.org/web/20181018043108/https://www.theage.com.au/business/aplng-joint-venture-to-boost-gas-supply-to-east-coast-20171026-gz8i7z.html. live.
  22. Web site: About the project. Australia Pacific LNG. 1 May 2015. https://web.archive.org/web/20140304220539/http://www.aplng.com.au/about-project/about-project. 4 March 2014. dead.
  23. Web site: Five Year Financial History - Origin Energy. Origin. Energy. 27 May 2020. www.originenergy.com.au. 3 July 2017. 14 June 2017. https://web.archive.org/web/20170614165550/https://www.originenergy.com.au/about/investors-media/reports-and-results/financial-history.html. live.
  24. Web site: Generation capacity and peak demand. 3 August 2015. Australian Energy Regulator. 28 April 2015. 5 April 2015. https://web.archive.org/web/20150405220755/http://www.aer.gov.au/node/9772. live.
  25. Web site: Electricity Generation . Origin Energy . 12 December 2016 . 13 February 2021 . https://web.archive.org/web/20210213234822/https://www.originenergy.com.au/about/who-we-are/what-we-do/generation.html . live .
  26. Web site: $30 Million Roma Power Station Meets Qld's Increased Electricity Demands . 3 June 1999 . Boral Limited . 12 December 2016 . 20 December 2016 . https://web.archive.org/web/20161220105021/http://www.boral.com.au/Docs/Announcements/Archive_1999/Archive_1999_15012004_113618.asp . live .
  27. Web site: Origin Energy ignores coal seam gas well leaks, whistleblower says. Slezak. Michael. 2017-01-26. The Guardian. en. 2018-05-10. 30 June 2018. https://web.archive.org/web/20180630161552/https://www.theguardian.com/environment/2017/jan/27/origin-energy-ignores-coal-seam-gas-well-leaks-whistleblower-says. live.
  28. Web site: second approval for fracking quickly follows the first. www.Katherinetimes.com.au. 22 August 2019. 2020-08-15. 15 October 2019. https://web.archive.org/web/20191015042651/https://www.katherinetimes.com.au/story/6343634/second-approval-for-fracking-quickly-follows-the-first/. live.
  29. Web site: Engaging with Traditional Owners – Origin Beetaloo. 2 September 2020. 12 August 2020. https://web.archive.org/web/20200812121918/https://originbeetaloo.com.au/engaging-with-traditional-owners/. live.
  30. News: Fracking to start in the Beetaloo . 21 September 2020 . Katherine Times . 22 September 2020 . 24 September 2020 . https://web.archive.org/web/20200924015926/https://www.katherinetimes.com.au/story/6933446/fracking-to-start-in-the-beetaloo/?cs=1459 . live .
  31. News: Finnanne . Kieran . 2020-03-26 . COVID-19 pauses Origin's Beetaloo activity Alice Springs News . en-AU . Alice Spring News . 2020-11-20 . 22 September 2020 . https://web.archive.org/web/20200922020542/https://alicespringsnews.com.au/2020/03/26/covid-19-pauses-origins-beetaloo-activity/ . live .
  32. Web site: Traditional owners banned from Origin Energy fracking meeting. Roxanne. Fitzgerald. 12 July 2019. Katherine Times. 28 September 2020. 7 November 2020. https://web.archive.org/web/20201107234349/https://www.katherinetimes.com.au/story/6271126/traditional-owners-banned-from-origin-energy-fracking-meeting/. live.
  33. News: NLC backs Origin in fracking stoush with traditional owners . 25 October 2021 . The Northern Territory News . 23 October 2020 . Darwin.
  34. News: Perkins . Miki . 2019-10-05 . Fractured future: Water fears as drilling for gas begins in the NT . en . The Sydney Morning Herald . 2020-11-20 . 15 October 2019 . https://web.archive.org/web/20191015042641/https://www.smh.com.au/national/fractured-future-water-fears-as-drilling-for-gas-begins-in-the-nt-20191003-p52xfj.html . live .
  35. News: Breen . Jacqueline . Morgan . Thomas . 19 September 2022 . Origin Energy backs out of investment into on-shore gas exploration in Beetaloo Basin . . 24 October 2023 . 31 October 2023 . https://web.archive.org/web/20231031121607/https://www.abc.net.au/news/2022-09-19/nt-beetaloo-origin-divestment/101453094 . live .
  36. Web site: Commission. Australian Competition and Consumer. 2020-12-22. Origin Energy pays penalty for allegedly misleading electricity customers. 2021-03-30. Australian Competition and Consumer Commission. en. 2 April 2021. https://web.archive.org/web/20210402004133/https://www.accc.gov.au/media-release/origin-energy-pays-penalty-for-allegedly-misleading-electricity-customers. live.
  37. News: Origin Energy pays $5m fine for exit fees . 25 October 2021 . 7News . AAP . 25 October 2021 . 25 October 2021 . https://web.archive.org/web/20211025090334/https://7news.com.au/business/finance/origin-energy-pays-5m-fine-for-exit-fees-c-4324917 . live .
  38. Web site: Hope . Zach . 2022-09-06 . Origin Energy pleads guilty to releasing contaminated coal seam gas water . 2022-09-13 . Brisbane Times . en . 13 September 2022 . https://web.archive.org/web/20220913204911/https://www.brisbanetimes.com.au/national/queensland/origin-energy-pleads-guilty-to-releasing-contaminated-coal-seam-gas-water-20220906-p5bfpg.html . live .
  39. Web site: 2022-09-06 . Origin Energy fined $60,000 in Brisbane Magistrates Court . The Chronicle.

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