AGL will go significantly higher on result, page-102

Power play: big energy wins pricing battle

The regulator has quietly assured retailers it will tweak the way it calculates how much bills can increase by, which will bolster corporate margins.

Muted increases will be cheered by authorities, which are under sustained pressure to temper cost of living pressures.

But limited increases will intensify pressure on the industry, particularly the likes of AGL and EnergyAustralia – analysts said.

“The macro environment is unchanged, electricity prices are settling to lower levels, which flows through AGL earnings. [default market offer]/[Victorian default offer] drafts will be a reminder of the potential impact. The progress on renewables/storage is positive but slow. Risk is government intervention,” Macquarie said in a note on Thursday.

Sustained increases to the default market offer has allowed the country’s heavyweights to repair their balance sheets after slumping to heavy losses.

The fortunes of the industry have also been aided by a tempering of the wholesale market.