Origin Energy expects a second-half earnings hit of about $20 million after record demand for power during February's spate of soaring east coast temperatures forced it to buy up additional power at a time of higher wholesale prices.
As the energy producer unveiled a first-half net loss of $1.68 billion, courtesy of huge writedowns on its Queensland LNG interests and other assets, Origin chief executive Frank Calabria said the heatwave would weigh on energy markets divsion earnings.
Despite that, Origin reiterated that its overall full-year underlying earnings guidance had improved to between $2.450 billion and $2.615 billion.
With the eastern states sizzling, average maximum demand in Queensland so far during Feburary has been 11 per cent above the previous record, which left the energy producer and retailer short, Mr Calabria said.
Origin has downgraded the upper end of its full-year earnings guidance for its energy markets unit by $40 million to $1.5 billion, and Mr Calabria said the impact was mainly in Queensland, where Origin does not run much baseload generation.
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"That demand is greater than we would normally cover and as a result we have therefore been more exposed to those prices," Mr Calabria said on Thursday.
"The midpoint of our guidance has essentially moved down by about $20 million, so it's in that order of magnitude to date."
Mr Calabria also called on government to clarify energy policies so the industry can get a timeline for the transition to renewables and invest in all types of infrastructure necessary for security of supply.
Business and community groups have called for politicians to stop trading insults on the issue, and Mr Calabria said long-term investment was currently risky.
"We really support that there be coordination between climate and energy policies because, if there's clear combination of those policies and they are well thought through and integrated, industry will get a signal of what environment we're investing into," Mr Calabria said.
"There would need to be clarity of how to meet emissions targets and what those targets would be."
Origin scrapped its interim dividend to focus on debt reduction after impairments against assets, including its Australia Pacific LNG project, dragged it to a first-half loss of $1.68 billion.
The huge Queensland project was responsible for more than half the $1.893 billion in impairments - announced on Wednesday ahead of Thursday's results - that widened Origin's loss from $254 million a year ago.
The energy producer and retailer said underlying profit also fell, by 27.6 per cent to $184 million, after low oil prices led to a lower contribution from the Australia Pacific LNG project.
The ConocoPhillips-operated project - of which Origin owns 37.5 per cent - was responsible for $1.03 billion in impairments, caused by several factors including an increase in US dollar-denominated interest rates.
ORIGIN'S FIRST HALF
* Net loss widened to $1.677b from $254m
* Underlying profit down 27.6pct to $184m
* No interim dividend, down from 10 cents
