The federal government's carbon price has pushed a Victorian brown coal-fired power station to slash capacity by a quarter, the operator says.
EnergyAustralia says the carbon price has significantly increased operating costs at the Yallourn power station, in a climate of weak wholesale electricity prices and falling electricity demand.
Only three of the four units at the Gippsland-based power station, which supplies about a fifth of Victoria's electricity, will stay in operation.
…Group executive manager of energy markets Mark Collette said the shutdown was an example of the carbon price working to reduce Australia's carbon emissions and the federal government needed to provide transitional assistance to brown coal power generators.
The Australian Conservation Foundation (ACF) hailed the Yallourn decision as evidence that policies like the carbon price and renewable energy target were working.
ACF climate change campaign manager Tony Mohr said since the carbon price was adopted, 3000 megawatts of dirty, coal-fired generation has been switched off.
Mr Mohr said it was no surprise electricity retailers and the owners of old generators were calling for the RET to be weakened.
Environment Victoria campaign director Mark Wakeham said the Yallourn move could see greenhouse pollution fall by four million tonnes a year.
But he said the federal government needed to review its $5.5 billion compensation payments to the nation's dirtiest power stations.
"Power stations like Yallourn and Hazelwood are likely to be making windfall profits because of the excessive compensation payments," he said.
Capacity at the Yallourn power station was reduced to just one generator in June after floodwaters caused a major shutdown.
Another two generators were brought back online at the end of July and the fourth was due to restart when coal supplies allowed.