Commonwealth Bank of Australia has quietly sold its stake in the nation's most carbon-intensive power station, at Hazelwood in Victoria.
Documents lodged with Victoria's Essential Services Commission (ESC) reveal that the power plant's majority owner, GDF Suez, has applied for permission to buy CBA's 8.16 per cent share. The documents show the contract was signed in May this year, but the application was posted on the ESC's website on September 6, a day before the federal election.
The 1500-megawatt brown-coal fired station is 150 kilometres east of Melbourne and has been a target for climate change activism for years. It provides about a quarter of Victoria's power. The bank was part of a partnership, led then by International Power, that bought the power station in 1996 for $2.35 billion.
GDF Suez merged with International Power. In 2010, CBA revealed it had written down its investment to $1 million at a time when Hazelwood was seen as a leading candidate for government funded closure. "The Hazelwood power station probably wasn't the best investment the bank made," CBA chairman David Turner said at the time.
"It's been written down to $1 million. And it's certainly not part of our core strategy and we wouldn't plan to repeat an investment like the one we made in Hazelwood." Environment groups have welcomed the sale.
It is understood the sale price for CBA's share was substantially above that amount. Environment groups have criticised the bank over the investment and endorsed the sale, although they have questioned why it would sell out now.
"Selling when the future of the carbon price is so uncertain seems strange," said Environment Victoria campaign director Mark Wakeham.
"I imagine it is a passive holding and I'm not sure what is triggering the decision to get out of it." Mr Wakeham did, however, note the power station faced potentially more significant structural market challenges as demand had fallen, depressing prices. It was likely that at least one coal station would need to close as those structural challenges intensified, he said.
Mr Wakeham pointed out that the company received compensation worth $268 million to help cover its carbon tax liability earlier this month. He estimated that liability was about $300 million given the subdued production environment, adding there was speculation in some quarters that Hazelwood's owners could seek a payment to close down under the Coalition's "direct action" approach to cutting emissions.