The biggest consumer of Victoria's brown-coal-fired electricity is to continue operating for decades after the surprise announcement of a long-term power deal for Alcoa's controversial aluminium smelters.
Unions were celebrating and environmentalists reeling last night with the news that aluminium giant Alcoa, Victoria's biggest exporter, had signed electricity contracts with generator Loy Yang Power for the smelters at Portland and Point Henry, near Geelong, until 2036. The existing power contracts expire in 2016 and 2014.
The cost of the new deal to Victorian taxpayers, if any, was unclear. But after decades of subsidising Alcoa's cheap power, the government said last night that it was not involved in the new deal and that subsidies would end in 2016.
''The Victorian Government subsidy will no longer be required,'' said Emma Tyner, a spokeswoman for Energy Minister Peter Batchelor.
The government also would not pick up Alcoa's costs in the event of an emissions trading scheme being introduced, Ms Tyner said. Late last year Alcoa pressed the government to shield it from the costs of an emissions trading scheme in Victoria due to the state's reliance on brown coal, the dirtiest of the major energy sources.