Origin supports Carbon Pollution Reduction Scheme

30 April 2009

Origin today expressed its support for the Carbon Pollution Reduction Scheme (CPRS). It encouraged the Senate to pass the legislation in order to alleviate uncertainty which is distorting the efficient operation of domestic energy markets and affecting decisions to invest in the new baseload electricity generation necessary to ensure reliable and competitive supply of energy in the longer term.

Addressing the Senate Select Committee on Climate Policy, Origin Managing Director, Mr Grant King said, “Participants in the National Electricity Market are assuming that a form of carbon regulation will be introduced that will affect prices for electricity. But they don't know when or in what form or by how much. In that context, they are unwilling to commit to long-term supply contracts that might quickly turn out to be well outside the market price.

“During the past year, liquidity in the market for long term electricity supply contracts has deteriorated substantially. Large industrial customers and electricity retailers are increasingly struggling to find electricity suppliers who will commit to long term price arrangements. Instead they are buying shorter term contracts at higher and more volatile prices,” he said.

Mr King said that uncertainty was also affecting decisions to invest in new baseload electricity generation. “Decisions to build baseload plant are big decisions. The investor lives with these decisions for 30-50 years. So do customers, the community and the environment. No-one is building new baseload coal plant, because investors foresee a carbon price being introduced eventually; but neither are they approving new baseload gas-fired plant because the investment case can't be supported under current conditions.”

Mr King said that the issue of carbon regulation needed to be addressed urgently. “With increasing overall demand for electricity, and a lead time of five years or more for new plant to be permitted and built, the electricity market needs companies like Origin to keep investing in new baseload capacity. A failure to maintain ongoing investment in new capacity can lead to supply/demand imbalances and, in turn, more volatile markets. More volatile markets may drive average prices higher for all customers. The price impact could be greater than the price of carbon, but to no-one's benefit.”

If we are to make any material reductions in Australia's carbon emissions by 2020 it will come primarily from changing the way existing assets using current fuels and proven technologies operate. An emissions trading scheme is the lowest cost, most flexible mechanism for driving the necessary change in the operation of existing assets, informing capital investment decisions for new assets and stimulating development in new technologies necessary to meet the long term challenge of climate change.

Origin believes that the currently proposed Carbon Pollution Reduction Scheme provides the basis of a scheme that will deliver this change without unnecessary disruption to Australian energy markets or Australian energy consumers.

Origin has approximately 3.5 million customers across Australia, New Zealand and the Pacific. It is a major investor in electricity generation infrastructure, with 1,450 MW of capacity in operation, 1,340MW in projects due to commence operation in 2009/10 and permits in place for a further 1450MW. Origin also has significant investments in a wide range of renewable energy technologies including hydro, solar, wind, conventional geothermal and hot rock geothermal. It is the largest seller of GreenPower in Australia, one of the largest providers in the country of voluntary carbon offsets and has been trading in carbon related markets since 2001.

For further information please contact:


Lina Melero
General Manager Corporate Communication
Ph: +61 2 8345 5217
Mobile: +61 427 017 798


Angus Guthrie
Manager Investor Relations
Ph: +61 2 8345 5558
Mobile: +61 417 864 255

About Origin Energy
Origin Energy is Australasia’s leading integrated energy company focused on gas and oil exploration and production, power generation and energy retailing.
Listed in the ASX top 20 the company has approximately 4,000 employees, is a leading producer of gas in eastern Australia, is the largest owner and developer of gas-fired electricity generation in Australia and is a leading wholesaler and retailer of energy. The company services more than 3.5 million electricity, natural gas and LPG customers across Australia, New Zealand and the Pacific. Origin’s strategic positioning and portfolio of assets provide flexibility, stability and significant opportunities for growth in the ever changing energy industry. Through Australia Pacific LNG, its 50:50 incorporated joint venture with ConocoPhillips, Origin is developing Australia’s largest CSG to LNG project based on Australia’s largest CSG reserves base.
In New Zealand, Origin is the major shareholder in Contact Energy, the country's leading integrated energy company, operating geothermal, thermal and hydro generation facilities and servicing electricity, gas and LPG customers across both the North and South islands. Origin also operates several oil and gas projects in New Zealand and is one of the largest holders of petroleum exploration acreage in the country.
Origin has a strong focus on ensuring the sustainability of its operations, is the largest green energy retailer in Australia and has significant investments in renewable energy technologies.
For more information go to www.originenergy.com.au