AGL boss calls for standard energy price comparison rate

standard energy price comparison rate
AGL Chief Andy Vesey

AGL Energy’s CEO Andy Vesey has called for the introduction of a standard energy price comparison rate and Chief Scientist Alan Finkel’s Clean Energy Target. He also speaks about his support for gay marriage.

Mr Vesey is widely regarded as one of the most progressive leaders in management of capital and people and since his appointment to the helm off AGL, shares have outperformed the S&P/ASX 200 Index by about 45%.

In a recent interview with Tony Boyd for AFR’s Chanticleer after the recent summons to Canberra, Mr Vesey spoke about improving the customer experience, lowering energy prices, the Finkel Review and his support of gay marriage.

He also gave details about AGL’s financial results, which were in line with market expectations.

Introduction of standard energy price comparison rate

Speaking about a standard energy price comparison rate, Mr Vesey said: “One of the benefits of the competitive market is the dispersion of offers in the market. But the flip side of that is, how do you compare them? That’s why we have always advocated for a comparative rate.”

He said that it was time for the government to end the confusion about retail energy prices and introduce a standard energy price comparison rate. He told Chanticleer: “I think that would then bring the position back to where it needs to be and everybody doing the best to get the best value to the customer and not giving them difficult and confusing offers.” He said that having a standard energy price comparison rate would allow people to make informed decisions about their energy provider.

Mr Vesey said there is only one sure way to get lower energy prices and that is through higher capital investment in new generation.

“In the near term we can’t do anything about pricing. The only thing we can do is get regulatory policy and certainty so that we can make investments,” he said.

Finkel Clean Energy Target needs to happen

Turning to the Finkel CET recommendation, he said: “That’s why we continue to say the Finkel Review is 50 recommendations not 49. It’s 50 and we should get ’em in and get ’em in fast, give certainty to the market and investments will flow and prices will come down.”

“The more investments you make the lower the prices get. The more supply that is available the lower the prices get. And even the anticipation of investments would lower the forwards because that’s the speculation that traders make. So, the recent moderation in the forwards is based on people announcing projects, not even building them.” Vesey said the Clean Energy Target recommended by Alan Finkel was essential for a smooth transition to investment in new generation.

“We are in this very challenging spot about transition. I believe private capital and competitive markets can better solve this issue than government intervention. Once government intervenes it has a chilling effect on capital.

“The CET would advance the investments dates of those cleaner technologies so you have a smoother transition from the existing infrastructure to the new stuff and avoid the volatility in the market called the Hazelwood effect. “A CET, even in the absence of a carbon target, is a good transition mechanism to bring along new investments sooner.”

Letter in favour of gay marriage reflects AGL’s “inclusive of all” philosophy

Vesey said he signed a letter in favour of marriage equality because he wanted to reflect the values of his workers and customers. “We have broad advocacy programs and yes I am one of the CEOs who signed that letter. I didn’t get a pie in my face but I signed that letter.”

He said one of AGL’s four values was “inclusive of all”, which aimed to make people welcome at work and comfortable, “so they can bring 100 per cent if not more of themselves to work every day”. “The only way we can do what is right for our customers is to understand them and reflect their same values internally. “For us, inclusive involves a broad definition of diversity. We are broadly supportive of a whole range of diversity … we want many viewpoints and many voices.

“That means that if we are willing to stand up for our own employees and our customers we will take what positions we believe are supporting them so that they feel comfortable. “People who believe in the values we believe in will want to align with this company. We are very public about that. We don’t hide it.”

This article first appeared in the Chanticleer section of the Australian Financial Review.

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