Aug. 28 (Bloomberg) -- AGL Energy Ltd., Australia’s second- biggest electricity retailer, is delaying power plants because of lack of demand after taking a A$45.8 million ($41 million) writedown on the assets.
“There are a number of projects we’ve been working on for some time, and in short, we don’t see those being developed any time soon,” Managing Director Michael Fraser said today in a phone interview from Sydney. “There’s plenty of generation capacity around.”
AGL wrote down the value of gas and renewable energy projects including the Leafs Gully power station in New South Wales and wind farms in South Australia, as part of A$441 million in impairments announced today. Electricity demand is weak because of a slower economy, an increase in solar power use and lower consumption as prices increase, AGL said.
The oversupply in the electricity market also affects the value of two power plants being sold by the New South Wales state government, Fraser said after the company reported a more than threefold jump in full-year net income to A$388.7 million.
AGL rose 3.1 percent to A$14.82 at 12:13 p.m. in Sydney, outperforming the 1.2 percent drop in the benchmark index.
While AGL is looking at Macquarie Generation, which owns the Liddell and Bayswater coal-fired plants, “there’s plenty of supply in the market at the moment, so it’s a question of value, and it’s a question of price,” he said. Fraser wouldn’t say whether AGL is bidding for the Macquarie power plants, citing a confidentiality agreement.
AGL recorded a pretax impairment of A$343.7 million for the year for its New South Wales coal-seam gas assets after the state government proposed restricting access to some areas for exploration and development.
AGL in July delayed the A$550 million Silverton wind farm in New South Wales because of uncertainty over government policy. The company in October suspended the development of the first stage of its 1,000-megawatt Dalton gas-fired power station in the state.
Full-year underlying profit rose to A$598.3 million from A$482 million a year earlier, it said today.
--Editors: Andrew Hobbs, Jason Rogers