News | 6th Sep, 2012

Burn on: PM’s dirty power buyback plan up in smoke

Thursday, 6 September 2012
Lenore Taylor and David Wroe, The Age

Australia's highest-emitting brown coal electricity generators are between $400 million and $1 billion better off than they would have been without the carbon tax, according to new modelling.

The generators' stronger-than-expected financial position forced the Gillard government yesterday to abandon its attempts to pay some of them to close down by 2020, infuriating environment groups and the Greens.

Giving up on the negotiations for early closure frees at least $1 billion in the budget from 2013-14. It means that greenhouse-intensive Latrobe Valley power plants Hazelwood, Yallourn and Energy Brix are likely to remain in operation for at least several years beyond their planned phase-out between 2016 and 2020.

The collapse of the talks has also triggered demands for the government to reconsider $4.5 billion worth of compensation yet to be paid to the companies on top of $1 billion in cash grants already handed over.

Those calls will become even louder as a result of the new modelling, by consultancy Frontier Economics, obtained by The Age.

''We estimate that, in total, the brown coal generators are, at the very least, around $400 million better off than if the Gillard government carbon pricing scheme had never been implemented. More likely, the collective gain in value … is around $1 billion,'' Frontier concludes.

Mark Wakeham, of Environment Victoria, said the government's compensation was unjustified if the power stations ''remain profitable and their assets are still valuable''.



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