Closure plans scrapped

THE cloud of uncertainty hanging over the future of Latrobe Valley’s power stations lifted yesterday as the Federal Government announced it would no longer seek to close local generators.

In a move that drew mixed reactions across the region, Federal Resources and Energy Minister Martin Ferguson announced the Federal Government would not offer financial support to close power stations under its Contract for Closure program, first flagged over a year ago.

Speculation the program would not proceed due to failed negotiations between generators and the Federal Government over the value of power station assets had mounted in past weeks.

Yesterday Mr Ferguson confirmed the government was not prepared to pay “the level of compensation sought” by generators.

The announcement inspired fury among green groups who claimed the government’s abandonment of plans to remove 2000 megawatts of coal-fired electricity from the system by 2020 was a “breach of faith”.

Mr Ferguson was unapologetic, telling The Express he was “not into appeasing the Greens” but was “into energy security and looking after taxpayers” and the contracts program “had not produced an outcome” to satisfy both criteria.

Scrapping proposed closures raised questions about whether some of the $200 million allocated to the Regional Structural Adjustment Assistance package would still be available for the Valley.

Federal Regional Australia, Regional Development and Local Government Minister Crean said he remained “committed to working in partnership with all levels of government and local leaders to develop a plan for economic diversification” in the Valley including a response to the Latrobe Valley Transition Committee’s report.

Mr Ferguson confirmed the RSAA would “remain available to assist regions that may be significantly affected by the introduction of the carbon price”.

The “envelope of money” available to compensate power stations to close early, however, would now “go back into the budget process”, Mr Ferguson said.

“This potential compensation money was in contingency reserve… it was in beyond forward estimates, it was part of the clean energy program and if (contract for closure negotiations) fell over, it was to go back into the budget process,” he said, adding “it was not ‘Latrobe Valley’ money”.

A further call from the Greens yesterday for a review into $5.5 billion in compensation being paid to generators for the purchase of carbon permits, was also rejected by Mr Ferguson who said “we think free permits were appropriate”.

Defending the environmental implications of a back-flip on plans to close down coal-fired generators, Mr Ferguson said “the truth is that (energy) demand is down” and that would equate to lower carbon emissions.

Local generators said they had negotiated with the Federal Government in “good faith” .

TRUenergy Yallourn said its negotiations had been based on a “realistic assessment of the value of the power station in the context of uncertain carbon prices” while IPR-GDF SUEZ Australia said it had not “been able to find common ground with the Federal Government on the terms of a closure”