The energy retailer’s statutory net profit for 2017/18 surged to $1.587 billion, nearly three times higher than the year before due to changes to valuations of hedging contracts.

AGL’s underlying profit for the year to June 30 was up 27.6 per cent to $1.023 billion, while revenue grew 1.8 per cent to $12.816 billion.

It said the increase in underlying profit came from strong earnings growth in wholesale electricity sales, offsetting a drop in retail customer sales and increased depreciation.

AGL chief Andy Vesey said shareholders have benefitted from recent high wholesale prices but acknowledged higher market prices are hurting household cost-of-living pressures.

“This increase in prices in the broader electricity market has mostly been a result of the abrupt closure of non-AGL power stations such as Hazelwood in 2017 and Northern in 2016 and higher input costs for coal and gas,” Vesey said in a statement.

“In this environment, we recognise that many Australian households are facing cost-of-living pressures because of the higher energy bills that have resulted from higher market prices. For that reason, we are investing to create new supply in the market.

Vesey also urged the adoption of the federal government’s National Energy Guarantee (NEG) plan for the nation’s energy security.

“While wholesale electricity prices have already begun to fall over the past 12 months, policy certainty is key to encouraging the additional generation supply that will place further downward pressure on prices and benefit consumers over time.”

AGL forecast underlying profit of between $970 million to $1.070 billion in 2019, slightly above its forecast 2017/18 range.

AGL shares were down 79 cents, or 3.6 per cent, to $21.22 at 1103 AEST.

AGL’S profit surge

NET profit after tax up 194.4 per cent to $1.587 billion

UNDERLYING net profit after tax up 28 per cent to $1.023b

REVENUE up 1.8 per cent to $12.816 billion

A FINAL dividend of 63 cents per share, franked at 50.4 cents

– AAP