Power plants agree to hold buyout talks

Sydney Morning Herald
11 July 2011, Page: 9

THE owners of two highly emitting coal fired power plants say they are prepared to talk to the government about being paid to close their generators under the carbon price deal. International Power which owns the Hazelwood plant in the Latrobe Valley confirmed last night it was open to discussions with Labor about its tender scheme to shut down 2000 MWs of coal fired generation capacity by the end of the decade.

That would be enough to shut down one large power plant, such as Hazelwood, and one smaller plant, such as Playford in Port Augusta, South Australia. In a speech last month the Energy Minister, Martin Ferguson, flagged the two plants as likely targets for any buyout. The government refused yesterday to say how much it would commit to closing plants.

The chief executive of International Power, Tony Concannon, said it was clear the government was targeting a Latrobe Valley brown coal generator for closure and he wanted to work with the government to remove the uncertainty as soon as possible" around Hazelwood's future.

Alinta Energy, the owner of Playford, went further. The chief executive, Jeff Dimery, confirmed the company would put up its 50 year old plant for closure under the tender. A spokesman for TRUEnergy which has previously indicated it may also be interested in a buyout of its Yallourn W power station in the Latrobe Valley said it needed to consider details of the compensation package. Along with buyouts, $5.5 billion in permits and handouts until 2016 17 will be given to coal electricity generators.

Compensation for generators will be overseen by a new Energy Security Council. Under a concession to the Greens, the Australian Energy Market Operator will also expand its planning for the electricity market in the next 20 years to consider greater use of renewable energy, including implications of moving to 100% renewable energy.

The chief executive of the Energy Supply Association of Australia, Brad Page, said while there were positives for the industry in the deal for coal fired electricity generators, risks remained, including loss of asset value of generators. The government used the carbon deal to responded to a longstanding report into energy efficiency options for Australia. The government rejected the report's recommendation to establish a national energy efficiency target but it will consider developing a scheme to make retailers force their customers to use less energy.