Power groups on par with banks for profitability
Figures released by the NSW Audit Office show the state government's electricity companies earned a combined profit of $1.54 billion in the year to June, up from $1.03 billion a year earlier.
This includes the electricity distributors, which have spent heavily on equipment over the past several years, triggering a round of price increases - and a public backlash that has resulted in lower electricity usage.
Surging profits pushed the electricity companies' return on equity to 15.2 per cent, from 10.7 per cent, well ahead of most ASX-listed industrial companies which earn closer to 10 per cent, and on a par with the big four banks which earn around 14 per cent to 15 per cent.
Additionally, the return on investment of the electricity companies rose to 19.9 per cent from 17.4 per cent, the report by the public audit office found.
This helped boost their overall contribution to the government's coffers to $2.2 billion, from $1.82 billion. This figure includes dividends, taxes and other payments to the state government.
In recent years, the government has sold the retail operations of the electricity companies, such as EnergyAustralia, Integral Energy and Country Energy, and some of the power generators at Lithgow and on the central coast. It is seeking to sell the remaining power generators, and is expected to propose selling all remaining electricity sector assets at the 2015 election.
When it was elected in 2011, the government said it would take $400 million in costs out of the power distributors, to rein in rising power bills. It has succeeded in slicing $1.35 billion off the combined costs of the three power distributors in NSW so far.
"The savings were mainly achieved through fewer capital expenditure programs in light of declining consumer demand, reductions in employee numbers, overtime and discretionary non-labour costs," the report noted.
The audit office also disclosed the power distributors boosted return on equity - a measure of their efficiency - in the 2013 financial year to 21.2 per cent from 15.2 per cent a year earlier. "A rising ratio suggests that an entity is increasing its ability to generate profit without needing as much capital," it noted.
Ausgrid and Essential Energy more than doubled their earnings.
Frequently Asked Questions about this Article…
Surging power prices have significantly boosted the profitability of NSW government-owned electricity companies, elevating them to the same level of profitability as Australia's major banks. Their profits increased by 50% in the year to June, reaching a combined profit of $1.54 billion.
Surging power prices have significantly boosted the profitability of NSW government-owned electricity companies, bringing them on par with Australia's major banks. Their profits increased by 50% in the year to June, reaching a combined total of $1.54 billion.
The return on equity for NSW electricity companies rose to 15.2%, which is well ahead of most ASX-listed industrial companies that earn closer to 10%. This puts them on par with the big four banks, which earn around 14% to 15%.
The return on equity for NSW electricity companies rose to 15.2%, which is higher than most ASX-listed industrial companies that earn around 10% and is comparable to the big four banks, which earn between 14% and 15%.
The NSW government has sold the retail operations of electricity companies and some power generators, with plans to propose selling all remaining electricity sector assets at the 2015 election. This move is part of a broader strategy to manage costs and improve efficiency.
The NSW electricity companies contributed $2.2 billion to the government's coffers, up from $1.82 billion. This includes dividends, taxes, and other payments to the state government.
The NSW government has successfully reduced the combined costs of the three power distributors by $1.35 billion. This was achieved through fewer capital expenditure programs, reductions in employee numbers, overtime, and discretionary non-labour costs.
The NSW government aimed to cut $400 million in costs from power distributors to manage rising power bills. They succeeded in reducing costs by $1.35 billion through fewer capital expenditure programs, reductions in employee numbers, overtime, and discretionary non-labour costs.
Electricity distributors in NSW have improved their efficiency by boosting their return on equity to 21.2% in the 2013 financial year, up from 15.2% the previous year. This indicates an increased ability to generate profit without needing as much capital.
In recent years, the NSW government has sold the retail operations of electricity companies like EnergyAustralia, Integral Energy, and Country Energy, as well as some power generators. They plan to propose selling all remaining electricity sector assets in the 2015 election.
NSW electricity companies contribute significantly to the government's coffers, with their overall contribution rising to $2.2 billion from $1.82 billion. This includes dividends, taxes, and other payments to the state government.
The return on investment for NSW electricity companies increased to 19.9% from 17.4%, indicating improved profitability and efficiency.
Ausgrid and Essential Energy have more than doubled their earnings, contributing to the overall profitability and financial success of NSW government-owned electricity companies.
Reduced consumer demand led to fewer capital expenditure programs, which helped NSW power distributors achieve significant cost savings and improve their return on equity.
NSW electricity companies have faced challenges due to public backlash over price increases, which have resulted in lower electricity usage. This has been a response to the heavy spending on equipment and subsequent price hikes.
Ausgrid and Essential Energy more than doubled their earnings, contributing to the overall profitability increase of NSW government-owned electricity companies.
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