At the same time, Morgan Stanley analyst Rob Koh reiterated his underweight call on AGL, pointing to policy uncertainty over the next 12 months as well as the intensifying negative impact of the surge in solar power generation on daytime power prices over the longer term.
Mr Koh said investors will increasingly need to look beyond average prices in the National Electricity Market to estimate earnings from AGL’s generation business, its biggest profit driver, and “re-evaluate the multiple they are willing to pay for baseload earnings in a firmed renewables world”.
Shares in AGL fell as much as 2.6 per cent to $20.67, making the stock the worst performer in the benchmark utilities index. The shares have climbed from under $18 as recently as late October.
AGL’s head of operations, Doug Jackson, noted that the customers for the coal ash had advised that testing on their own products had not revealed any problems with heavy metal levels.
“Our external expert’s initial advice is that the levels detected in the coal ash samples taken do not pose a risk to public or worker health and are unlikely to pose an unacceptable risk to the environment given the uses to which the coal ash is put,” Mr Jackson said.
“We acknowledge failures in our own practices, and a thorough review is underway.”
The EPA couldn’t immediately comment.
The problem has not affected generation at either the Bayswater or Liddell coal generators, which are expected to be critical to the ability to meet NSW’s power demand on Friday when temperatures are set to surge into the 40°s across much of the greater western Sydney region.
The Australian Energy Market Operator has advised of a likely shortage in reserve generation on Friday, a situation that could lead to demand response measures being triggered to avoid forced disconnections.
The Nature Conservation Council of NSW called on the government to require AGL to fully disclose the level of contamination of the coal ash. Environmental Justice Australia described the situation as “a huge failure of the EPA to protect environmental and community health by allowing industry to self-reulgate and self-manage.”
from A Viral Update http://bit.ly/2HhMLcP
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