Analysis of Corporate Governance in Australian Energy Sector (BAP71B)

This report provides a comprehensive analysis of the corporate governance structures, policies, and practices of two major ASX-listed energy companies in Australia: AGL Energy and Origin Energy. The report examines their adherence to the ASX Corporate Governance Principles and Recommendations, focusing on key aspects such as customer requirements, financial performance, strategic initiatives for future growth and development, and commitments to societal and customer well-being. It compares the two companies' approaches to corporate governance, highlighting their strengths and weaknesses based on their 2018 annual reports. The analysis covers financial performance, future strategies, and the companies' responses to industry challenges such as rising energy prices and evolving market dynamics. The report concludes with an overview of the opportunities and challenges facing the Australian energy sector, emphasizing the importance of effective corporate governance in ensuring sustainable business practices and customer satisfaction.

Running head: AUSTRALIAN ENERGY SECTOR
Australian Energy Sector
Name of the Student:
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Table of Contents
Summary....................................................................................................................................2
Introduction................................................................................................................................3
Discussions.................................................................................................................................3
Conclusion..................................................................................................................................5
Reference....................................................................................................................................6

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Summary
Origin Energy and AGL Energy are the two companies that are listed on ASX and
two of these companies are determined to make sure that the corporate governance structure
and policies and practice are of a standard which will be on the top position in the market.
The two companies have effective knowledge of the corporate governance structure and the
company has implemented the ASX corporate governance principles efficiently. The report
contains a details of the corporate governance policies, structure and practices and a detail of
the main governance issue of AGL and Origin Energy for the period of the financial year
2018.
The report is prepared with the aim to mention and compare on the corporate
governance structure of the two organisations that are listed in ASX and how effectively the
companies have implemented the ASX corporate governance principles and references in
their organisation. the focus of the report is on the customer requirement, financial
performance the strategy that the company made to assess the upcoming growth and
development and assurance towards the society and to the customers (Penesis et al 2018) .
The selected companies are the two major energy providers in Australia that are
engaged in both the production and retailing of electricity and gas for domestic and
marketable use (Chen, et al 2017).
In comparison to AGL Energy, Origin Energy is larger in size in retail market of
Australia. Origin Energy is listed in the ASX with a market capitalisation of $15.84 billion.
The Origin Energy take over the retail business of essential energy and country energy at the
time of privatisation of these two companies by the government of new south wales. At
present after the acquisition of the two companies the customer base of Origin Energy has
increased to 4.3 million and most of there customers were based in the south Australia,
Victoria, new south wales and Queensland. The largest generation function of 6010 MW of
capacity has been operated by the Origin Energy. The company also possesses or have
interest in a widespread function of upstream assets which includes the production of
electricity, evacuation of gas, and also diffusion of gas (Wilson and Pender 2017).
All sorts of information have been gathered by us that are related with the companies’
corporate governance structure and policies done by proper analysis, I have observed that the
policies and framework of corporate governance of Origin Energy is far better than the AGL
Energy (Teske et al 2017).
Introduction
The financial year 2018 was perceptible by public with regard to public policy as the
prices of gas and electricity increased over the year. For this reason, the electricity industry
endures to stay in under presidential level of monitoring. As most of the portion of the
electricity and the gas industry is acquired by AGL and Origin Energy they are responsibly
funding continuous solutions for energy related problems. As associated with the NSW

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generation plan the companies assist us to keep our concentration on the important
belongings, our customers, the innocent and complete process of our assets and our portion in
supplying a suitable energy, coming for Australia. The financial results of AGL was very
strong and the safety measures that they have taken are also very effective. The injury rate
reported by the employees of AGL has condensed while the target fixed for the women
depiction in the senior leadership positions have increased, and currently the increased
percentage is 42. In comparison to this the financial position of origin industry become
stronger in the current market conditions. In both the gas and energy sections the company
has been able to increase its profit margin. The company has been able to reduce the debt
obligation and increasing the profitability the company has been able to achieve a stronger
financial condition in comparison to AGL. However, despite of this achievement the
company fail to met its targeted capital structure, the board has not compensated its dividend
for 2018 financial year. The chief objective of the companies is to reduce the price of the
electricity in the coming days (Pham 2017).
Discussions
What they are doing for the customers
The main aim of these two companies is to reduce the cost of energy and reduce the
burden of the customers to pay high electricity bill. The decision of AGL to close the
operation of the two expansive control stations in a very short period which helps to give
more discounts in the costs of electricity. In comparison to this the discounted costs of
elementary energy started to shrink in between the year due to the moving forward
arrangement and the decreasing costs of the renewable energy (Mackaya and Haque 2016). In
reaction to this AGL started to rise generation at earring, which help the company to reduce
the costs. This reduction in the costs of electricity has helped the company to bring new
customers in the idle south grains, Queensland, south Australia and the Australian capital
region from 1st July 2018. This will enable the company to get superior costs, with vital
renewable supply as the company will come online by 2020, and assist in diminishing the
discounted costs of power supply (Nicholl et al 2017).
Origin Energy has started to pay in undertakings that will make the cost of energy
more sensible in Australia. This integrates a expansion of 100 MW advancement in the bays
water regulator station which is located in the seeker valley and undertaking expansion,
through the process of fuelling Australian renewable finance, of the contemporary wind
farmsteads at silver ton in unused south grains and coppers hole in Queensland, which if get
accomplished will be considered to be one of the major wing farmsteads in Australia. For this
they have signed a contract to raise 300 MW from the sun concerned with ability from
complaining Australia’s sunraysia sun power-driven company that wants to close the unused
border of the south wales Victoria and are very eagerly observing for, to invest additional
third party venture through a mutual understanding between the two companies. Besides this
the company wants invest $295 million to build a 210 MW gas fired barker station control
position in south Australia, which they have expected will be operated during the financial

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year 2020. For this the company decided to invest another $400 million to progress a 252
MW gas plant in modern south ribs in between the financial year 2022 (Sivathaasan 2016).
Financial performance
The AGL energy’s financial performance has improved due to the multibillion
investment that they have made in the electricity generation in the previous year and served
high customer retention level that help them to carry on their path of success (Crowley 2017).
The company also started to finance new growth opportunities and these strategies are
classified into six categories to maximisation business operations such as
 Invite new customer
 Preserve and help customers as proficiently as possible.
 Function, uphold and reintroduce the energy supply portfolio at the cheapest price.
 Safeguard key systems and programs that will increase the rate of growth.
 Develop new technologies and systems that is required to meet customer demands
 Identification and taking necessary actions to capitalize in new regions of commercial
growth, and
 Encourage energy strategy conversation in order to maintain justifiable long term
production.
The chief objective of distributing these priorities is to improve the business growth and to
sustain the market for long time (Ali 2016).
AGL company has announced that there operating cost in this year will not increase
than the operating costs, the company has reduced there operating cost by $120 million in the
financial year 2019. This includes the optimisation of process and optimum usage of the
resources that are required to continue operations. The company has also upgraded the
enterprise resource planning system that helps in reducing the cost of operation in the current
financial year (Nelson 2018).
The future
The main priority of the Origin Energy is to reduce the burden of growth and improve
the growth of the company. It was also prominent on climate conversion, by committing to
reduce the emission by 2032 as per the requirement of the Paris agreement. The main fact of
AGL is to generate a contemporary power era undertaking with an add up to the assumption
of capital investment of $2 billion with our partners. The company in addition to that
committed to paradigm on our pre surviving plans to help the existing clients, including 50
million of adversity responsibility mitigation and the growth to all states of automated
reliability reductions to the clients that are associated with them for an elongated time. AGL
is committed to provide long-term techniques and serve the clients their best service at the
cheapest possible rate. AGL begun to give emphasis on the carbon forced prospect and build
client backup and dedicated not to intensify the coal fired power generation assets that past
their existing plan exists and set out how to supervise them proficiently in the coming days
(Beardsmore et al 2015).

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Conclusion
In conclusion, it can be stated that despite of the obstacles completed by excessive
energy costs, arrangements vagueness and growing competition for the two companies the
greatest is to reduce the cost of energy to assault more clients. The financial year 2018 is
considered to be the year of rapid growth and to acquire more customers in the coming days.
AGL has been able to keep a compact source base and a customer base of additional than 3.6
million accounts in this financial year. Origin Energy also by investing in some major
projects have been able to expand their customer base and able to generate more revenue than
the previous years. Therefore, from the above discussion it can be observed that for both the
two companies and the energy industry a lot of opportunity will occur in the coming days.

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