August 23, 2018 / 11:17 PM / 9 months ago

UPDATE 2-Australia's AGL seeks new CEO at tricky time for power industry

* CFO Redman steps in as interim CEO

* AGL, peers under pressure to cut energy bills

* AGL under pressure to keep coal-fired plant open

* AGL shares rise 1 pct (Recasts with investor comment, share reaction)

By Sonali Paul

MELBOURNE, Aug 24 (Reuters) - Australia’s biggest power producer, AGL Energy, on Friday eased out its chief executive Andy Vesey, looking for a new leader at a time when it faces government pressure to slash energy bills and shore up a shaky grid.

AGL appointed long time Chief Financial Officer Brett Redman to the top job on an interim basis, saying it was in the final stage of hunting internally and externally for a new chief executive.

Vesey, 63, agreed to quit after nearly four years in the role, just two weeks after delivering a record billion dollar profit, along with a warning that its profit was unlikely to grow much this year as power prices are set to peak.

AGL declined to comment on why Vesey was leaving, other than to say he had successfully led a push to turn the company into a cleaner power producer over the long term and had improved customer service.

“He leaves the company in a robust financial position from which to continue to lead investment in our transitioning industry and in our long-term growth,” AGL Chairman Graeme Hunt said in a statement.

The sudden exit of the American comes at a difficult time for AGL and its peers Origin Energy and EnergyAustralia, owned by Hong Kong’s CLP Holdings, as they face political heat to slash household energy bills.

At the same time, the government’s push to end a decade of uncertainty for the industry with a policy to make power supply more reliable, cut emissions and lower prices collapsed this week and could become a big issue in a looming federal election.

“Whether it’s a new CEO or an existing CEO, it’s a tricky time for the utilities industry. It’s just tough in terms of what the government’s trying to propose,” said Jason Teh, chief investment officer of Vertium Asset Management, which does not own AGL shares because of the regulatory risks it faces.

The government this week gave the competition watchdog authority to force the big retailers which own generation to spin off assets if they are found to be price gouging.

AGL has also been feuding with the federal government over the company’s plan to shut one of its coal-fired power plants in 2022 at a time when Australia needs coal- and gas-fired plants to back up wind and solar power.

On Friday the Australian Energy Market Operator warned that the southeastern states face heightened blackout risks over the next few years as ageing coal-fired power plants become less reliable.

AGL shares rose 1 percent on Friday, outpacing a 0.4 percent rise in the broader market.

“From a stock investment implication, I don’t think there’ll be any immediate change,” Vertium’s Teh said.

Vesey and Redman were not available for comment.

Reporting by Sonali Paul; additional reporting by Aby Jose Koilparambil in Bengaluru; editing by Richard Pullin

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