AGL, the country’s largest electricity supplier, has cut its annual profit target due to an outage at one of the generating units at its giant Loy Yang A coal-fired power station in Victoria’s Latrobe Valley .
The company previously expected underlying after-tax profit of between $260 million and $340 million, but said Monday it now expects a range of $220 million to $270 million.
Unit 2 of AGL’s Loy Yang A plant was taken out of service on February 15 due to a generator power failure.
The company noted that the financial impact of the breakdown cannot be recovered by insurance. He doesn’t expect the unit to be back online until August 1.
“However, technical assessments are continuing and AGL will notify the market of any material changes within this time frame,” he said.
Loy Yang A, which runs on lignite, is Victoria’s largest power station, supplying around 30% of the state’s electricity. This is the second time Unit 2 has failed in the past three years following a seven-month outage in 2019.
The latest breakdown is premature for AGL, given that wholesale electricity prices are rising in Victoria. Wholesale futures prices in Victoria soared to $176 per megawatt-hour from less than $60 earlier this year.
Barrenjoey analyst Dale Koenders said the outage “adds to uncertainty” over AGL’s proposed spin-off, under which it intends to separate carbon-intensive power plants from its retail branch and its cleaner production assets.