** Shares of utility firms AGL Energy AGL.AX and Origin Energy ORG.AX advances between 0.3% to 0.7%, tracking broader utilities' sub-index .AXUJ gains of 0.7%

** Morgan Stanley flags FY27 margin pressures for both firms after the Australian government pledges free daily solar power expected from 2026

** Expects a negative EBITDA impact of ~A$70 mln ($45.49 mln) each for AGL and ORG, before mitigation

** Mitigation includes repricing non-free tariff components, reduced market discounting to offset costs - MS

** YTD, AGL down 21.7% vs ORG and AXUJ's gains of 9.7% and 9.4%

($1 = 1.5389 Australian dollars)

(Reporting by Kumar Tanishk in Bengaluru)

((Tanishk.Kumar@thomsonreuters.com; X: @thatstanishk http://www.x.com/thatstanishk;))