Public

AGL gives strong indication that Liddell will close.

Company/ASX Code : AGL Energy Limited (AGL)
Venue :
10:30am Melbourne Recital Centre
31 Sturt Street
Southbank, Melbourne, Victoria
Monitor : Mr Ian Graves
AGM Details / NoM : Wednesday 27th September, 2017
# of Attendees : 187
# Holdings represented by ASA : 598
Value of Proxies : $56.8m
# Shares Represented by ASA : 2,471,991 (equivalent to 13th largest holder)
Market Capitalisation : $15.2 billion

(Meeting attended by R McKenzie.)
For all of the hype and expectations there would be fireworks at the AGM, the meeting turned out to be quite a sombre occasion.  The chairman Jerry Maycock introduced the board and the CEO. He then announced that following the first strike last year, a number of significant changes had been made to the REM.

The financial results were all positive. Dividends increased, as did franking – now to 80% franked. In this rising energy price environment, AGL has performed well. The company has exercised strong cost discipline through the cycle even though raw materials (coal & gas) prices had risen.

The chairman gave a strong indication that Liddell power station will close as scheduled in 2022.  The site would be decommissioned and either repurposed as a gas fired power station or as a battery storage farm. The company is continuing to expand their renewable power sources and these would supplement power to the national grid as and when Liddell closes.

The chairman also summarised the board changes. He announced he was to step down as chair at the conclusion of the meeting and that Graham Hunt was to take over. 

CEO&MD Andy Vesey outlined their operations in more detail and also gave a strong indication Liddell was to close as per schedule. Vesey claimed that the unplanned closure of Hazelwood caused the rise in energy prices. He showed a chart that supported this theory. This seemed to be part of the political blame game that has embroiled both federal and state governments as well as energy suppliers. But it is the customers that are paying the bills. 

Vesey stated that AGL was assisting customers find better deals through discounting and that they have set up a simple comparative website so that customers can select the cheapest plan. That aside, bad debts and disconnections have increased over the past 12 months.

Several questions relating to Liddell, greenhouse gases, renewable options and clean coal options were raised by shareholders.  All questions were dealt with by either the CEO&MD or by one of the operations KMP.

The ASA asked questions relating to skin in the game – the new AGL policy allows too much time to reach the target shareholding. We also asked about political donations and attendance at political functions.  No and no were the answers from the chairman.

The ASA announced we were voting against the REM and the award of performance rights to the CEO&MD as the rights were measured over 3 years – not 4 years and that the hurdles for STI (short-term incentives) & LTI (long-term incentives) awards were generally seen as too low.

We voted against the re-election of Les Hosking due to lack of skin in the game and his failure to consult with ASA following receipt of their first strike last year. This will be Mr Hosking’s final term as a director.

We questioned Peter Botten regarding his role as MD&CEO of Oil Search Limited and the potential for conflict of interests in dealings between the two companies.  The chairman assured the audience that Mr Botten would always declare any conflict and step aside from meetings or discussions if a conflict arose. We accepted this and voted in favour of his reappointment.

All resolutions including the remuneration report were passed with 97% or more in favour. Accordingly, the spill resolution was not put to the meeting.