Origin Energy

Origin Energy 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] In 2022, it was Australia's fourth largest climate polluter.[4] It owns 20% of Octopus Energy, a UK renewable energy retailer, a stake potentially worth billions of dollars.[5]

Origin Energy Ltd
TypePublic
IndustryEnergy
FoundedFebruary 2000, but parts of the business date from the 20th century
HeadquartersBarangaroo
Sydney, New South Wales, Australia
Key people
Frank Calabria (CEO) (MD)
ProductsElectricity, natural gas, solar panels, LPG, hot water, heating and cooling, electric vehicle charging, broadband
RevenueDecrease A$12.097 billion (2021)[1]
Decrease A$-2.289 billion (2021)[1]
Websiteoriginenergy.com.au

It has entered into a binding agreement to be bought by Brookfield Renewable Partners and EIG, which will split the company in two, with electricity generation and retail being owned by Brookfield, and gas being owned by EIG.[6][7]

Brookfield then plans to invest a further $30 billion to transition Origin to renewable energy.[8][7] The deal was approved by the ACCC and is due to be implemented in December 2023, and Origin has clearly stated it is unable to match Brookfield's proposed investment in renewables.[9][10][11] However, Origin's current largest shareholder, Australian Super, as of September 2023 was advocating for a higher price.[12] The scheme will be voted on by investors on November 23, 2023.[13]

History

Origin Energy was formed 18 February 2000, as a result of a spin-off from Boral.[14] SAGASCO (formerly known as the South Australian Gas Company) became part of Origin Energy as part of the demerger.[15]

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.[14] Origin sold its 53% shareholding in Contact Energy to the market in 2015.[16]

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.[17]

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,[18][19] 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.[20]

In June 2022, it was announced that Origin had been fined $17 million for breaching its obligations to customers experiencing hardship and payment difficulties.[21]

In August 2022, the company announced a goal for net-zero direct and indirect emissions by 2050.[22]

In November 2022, Origin received a takeover offer from a Brookfield Asset Management and EIG Global Energy Partners consortium for A$18 billion.[23][24] 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.[25] In October 2022, the takeover was approved by the Australian Competition & Consumer Commission.[26]

Core business
Uranquinty Power Station (Natural gas)

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.[27]

Australia Pacific LNG, Queensland, Australia

Australia Pacific LNG (APLNG) is an incorporated company owned by Origin Energy, US giant ConocoPhillips and China's Sinopec.[28] 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.[29]

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.[28]

Energy retailing

Origin has approximately 4.217 million customers, servicing both large energy customers and the residential and small business market.[30]

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.[31]

Power station[32]StateLocationCapacity MWPeak/baseCommissionedFuelNotes
Darling Downs Power StationQueenslandDalby644Baseload2010coal seam gas from the Surat Basin
Roma Power StationQueenslandRoma80Peaking1999Gasbuilt by Boral[33]
Mortlake Power StationVictoria12 km west of Mortlake566Peaking2012Otway Basin gasLargest gas-fired power station in Victoria
Ladbroke Grove Power StationSouth AustraliaPenola80Peaking2000Natural gas
Quarantine Power StationSouth AustraliaTorrens Island224Peaking2000 (enlarged in 2009)Gas
Uranquinty Power StationNew South WalesUranquinty664Peaking2009Gas
Eraring Power StationNew South WalesDora Creek2880Baseload1982CoalAustralia's largest power station
Mount Stuart Power StationQueenslandStuart, Townsville423Peaking1999KeroseneNorth Queensland's largest power station. Open-cycle gas turbine
Shoalhaven Hydro Pump Storage SchemeNew South WalesKangaroo Valley and Bendeela240Peakingtwo pumped storage hydropower stations Water
Osborne Cogeneration PlantSouth AustraliaOsborne180Baseload and peakjointly owned by Origin and ATCO Power
Worsley Cogeneration PlantWestern AustraliaWorsley60provides steam and power to the Worsley Alumina Refinery. Jointly owned by Origin and Verve Energy
Dandenong Cogeneration PlantVictoriaDandenong120gasIn partnership with Places Victoria, Australia's first urban distributed energy precinct
Bendigo and Ballarat Solar ParksVictoriaBallarat and Bendigo0.3002009Solargenerate 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.[34]

Beetaloo Basin fracking

Origin was approved by the Northern Territory government to start fracking in August 2019[35] and drilling commenced in October 2019.[36] Fracking began in September 2020 following a six-month COVID-19 induced stand down.[37] Origin has postponed production at their Kyalla well site to the second half of 2021 due to the COVID-19 pandemic.[38]

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.[39] Accusations that Origin did not consult with traditional landowners before starting their planned exploration[40] were refuted by the Northern Land Council which stated it understood the text in the contracts and consulted with traditional Aboriginal landowners.[41] Origin stated that it conducted multiple checks when installing a well and that fracking stops if a check fails.[39]

Origin divested from projects in the Beetaloo Basin in the Northern Territory in 2022.[42]

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.[43]

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.[44]

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.[45][46] 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.[45]

References
  1. "Annual Report 2021 - Origin Energy" (PDF).
  2. "Brookfield's positive Origin Energy transition". Australian Financial Review. 11 April 2023. Retrieved 11 September 2023.
  3. Toscano, Nick; Foley, Mike (17 February 2022). "Origin Energy to bring forward closure of Australia's largest coal-fired power plant". Sydney Morning Herald. Retrieved 18 February 2022.
  4. "Green Electricity Guide".
  5. Gottliebsen, Robert (24 October 2023). "We risk getting out of global transformation too early". The Australian. Retrieved 24 October 2023.
  6. Hannam, Peter (10 November 2022). "Origin Energy to be split in half and invest in renewables under new $18.4bn takeover bid". The Guardian. ISSN 0261-3077. Retrieved 22 October 2023.
  7. "Brookfield and EIG Consortium Sign Binding Agreement to Acquire Origin Energy". Brookfield Renewable Partners. Retrieved 11 September 2023.
  8. "Origin Energy takeover: Brookfield lifts renewables spend to $30b in Australia". amp.smh.com.au. Retrieved 11 September 2023.
  9. Kruger, Colin (22 October 2023). "Australia's green future at stake as Origin takeover hangs in balance". The Sydney Morning Herald. Retrieved 23 October 2023.
  10. "Origin valuation stirs investors' quest for higher offer". Australian Financial Review. 18 October 2023. Retrieved 22 October 2023.
  11. Hannam, Peter (10 October 2023). "ACCC approves $18.7bn Origin Energy buyout to 'accelerate renewables rollout'". Guardian Australia.
  12. "AusSuper turns Origin takeover on a dime". Australian Financial Review. 21 September 2023. Archived from the original on 21 September 2023. Retrieved 23 October 2023.
  13. Allen, Bronwyn (19 October 2023). "Origin Energy shares higher as date is set for shareholder vote on takeover". The Motley Fool Australia. Retrieved 25 October 2023.
  14. "Our history". Origin Energy. 17 December 2020.
  15. "Origin Energy Ltd Form 20-F/A (Amended Annual and Transition Report)". Retrieved 19 February 2019.
  16. "Origin Energy sale of Contact completed" (PDF) (Press release). Contact Energy. 5 August 2015. Archived from the original (PDF) on 23 January 2016.
  17. "New dawn for Qld energy market" (Press release). Energex. 1 February 2007. Archived from the original on 8 February 2007. Retrieved 16 June 2014.
  18. "Acquisition of New South Wales Energy Businesses". Origin Energy. December 2010. Retrieved 13 October 2017.
  19. "Origin buys NSW power assets for $3.25b". The Sydney Morning Herald. 14 December 2010. Retrieved 19 February 2019.
  20. "Origin completes acquisition of Integral Energy and Country Energy retail businesses and enters binding GenTrader arrangements with Eraring Energy" (Press release). Origin Limited. 1 March 2011. Retrieved 10 April 2011.
  21. Harmsen, Nick (29 June 2022). "Federal Court orders Origin Energy to pay $17 million penalty over breaching hardship obligations". ABC News. Retrieved 24 October 2023.
  22. "Australia's Origin Energy sets sights on net-zero emissions by 2050". Reuters. 26 August 2022. Retrieved 13 September 2022.
  23. Toscano, Nick (10 November 2022). "Origin Energy fields $18b takeover offer from Brookfield". Sydney Morning Herald.
  24. Macdonald, Anthony; Thompson, Sarah; Sood, Kanika (10 March 2023). "Origin Energy bidders ready to sign on the dotted line". Australian Financial Review. Archived from the original on 10 March 2023.
  25. Marchese, Adriano (27 March 2023). "Brookfield Renewable Enters Australian Renewable Energy Market with Origin Energy Deal". The Wall Street Journal. Archived from the original on 2 April 2023.
  26. ACCC clears Canadian fund's $18.7n takeover of Origin Energy Sydney Morning Herald 10 October 2023
  27. "Origin agrees to sell Lattice Energy for $1,585 million" (PDF) (Press release). Origin Limited. 28 September 2017. Retrieved 1 May 2020.
  28. Latimer, Cole (26 October 2017). "APLNG joint venture to boost gas supply to east coast". The Age.
  29. "About the project". Australia Pacific LNG. Archived from the original on 4 March 2014. Retrieved 1 May 2015.
  30. Energy, Origin (27 May 2020). "Five Year Financial History - Origin Energy". www.originenergy.com.au.
  31. "Generation capacity and peak demand". Australian Energy Regulator. 3 August 2015.
  32. "Electricity Generation". Origin Energy. Retrieved 12 December 2016.
  33. "$30 Million Roma Power Station Meets Qld's Increased Electricity Demands". Boral Limited. 3 June 1999. Retrieved 12 December 2016.
  34. Slezak, Michael (26 January 2017). "Origin Energy ignores coal seam gas well leaks, whistleblower says". The Guardian. Retrieved 10 May 2018.
  35. "second approval for fracking quickly follows the first". www.Katherinetimes.com.au. 22 August 2019. Retrieved 15 August 2020.
  36. "Engaging with Traditional Owners – Origin Beetaloo".
  37. "Fracking to start in the Beetaloo". Katherine Times. 21 September 2020. Retrieved 22 September 2020.
  38. Finnanne, Kieran (26 March 2020). "COVID-19 pauses Origin's Beetaloo activity | Alice Springs News". Alice Spring News. Retrieved 20 November 2020.
  39. Perkins, Miki (5 October 2019). "Fractured future: Water fears as drilling for gas begins in the NT". The Sydney Morning Herald. Retrieved 20 November 2020.
  40. Fitzgerald, Roxanne (12 July 2019). "Traditional owners banned from Origin Energy fracking meeting". Katherine Times.
  41. "NLC backs Origin in fracking stoush with traditional owners". The Northern Territory News. Darwin. 23 October 2020. Retrieved 25 October 2021.
  42. Breen, Jacqueline; Morgan, Thomas (19 September 2022). "Origin Energy backs out of investment into on-shore gas exploration in Beetaloo Basin". ABC News. Retrieved 24 October 2023.
  43. Commission, Australian Competition and Consumer (22 December 2020). "Origin Energy pays penalty for allegedly misleading electricity customers". Australian Competition and Consumer Commission. Retrieved 30 March 2021.
  44. "Origin Energy pays $5m fine for exit fees". 7News. AAP. 25 October 2021. Retrieved 25 October 2021.
  45. Hope, Zach (6 September 2022). "Origin Energy pleads guilty to releasing contaminated coal seam gas water". Brisbane Times. Retrieved 13 September 2022.
  46. "Origin Energy fined $60,000 in Brisbane Magistrates Court". The Chronicle. 6 September 2022.
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