Credit Suisse's revision to AGL is academic at best. FY22 and FY23 are the low points when it comes to electricity prices regardless of market / gas or coal price intervention.
Most of the current year pricing is based on covid lows of gas and coal - and with those days well past us, it's safe to say all the brokers have undershot their forecasts and we will expect significant upward revision of forecasts.
The suggested coal price cap of $125/tonne is equivalent to $50-55/MWH fuel cost which is double the cost of AGL's contracted coal costs - hence why the impacts to AGL will be limited.
The biggest upside is not about what happens in NSW or QLD coal price caps, but actually VIC, where you would expect more electricity exports to NSW as Liddell is decommissioned - in turn supporting the convergence of VIC and NSW electricity prices, further benefiting AGL's Loy Yang.
Below is an old report from AEMC which forecasts future electricity prices using the "prudent retailer" curve... a hedging approach which seemed to have been missed by a number of electricity retailers until it was too late.
AGL Price at posting:
$8.10 Sentiment: Buy Disclosure: Held
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