The State Government’s decision to triple Victoria’s coal royalty rate has drawn criticism from the Latrobe Valley power industry.
The decision has also prompted fears from Member for Morwell Russell Northe the rate increase will have a detrimental impact on local jobs.
At the weekend the government announced it would triple the brown coal royalty rate from 1 January next year, raising $252 million over four years.
Treasurer Tim Pallas said the increase would bring Victoria in line with other states, and power companies could “easily absorb this charge” and there was no reason for it to be passed onto consumers.
A spokesperson for Hazelwood Power Station and Loy Yang B owner ENGIE said the increase would inevitably have a “detrimental impact on the region’s energy sector” and it had not been consulted on the decision.
“We’re not saying there is a direct impact on jobs,” the ENGIE spokesperson said.
“However, this government decision takes $20 million a year straight out of the Hazelwood business.
“That is a significant additional cost that has to be found at a time when we are already experiencing very difficult electricity market trading conditions.
“ENGIE is a significant investor in Australia and Victoria and while we do understand the need for an energy transformation, policies that continue to damage our business commercially will not help the community of the Latrobe Valley or the Victorian economy in the longer term.”
AGL Loy Yang general manager Steve Rieniets said the increase in royalties would add almost $35 million in annual operating costs to the business.
“Increased costs of this magnitude could flow through to wholesale electricity prices and ultimately to customers,” Mr Rieniets said.
An Energy Australia Yallourn spokesperson said the company was working to understand the impact of any increase in mining royalties on customers and its business more broadly.
“As we’ve consistently said, operators and government should be mindful in any decisions they make of minimising or avoiding additional costs to customers,” the spokesperson said.
Mr Northe said the “massive increase in costs” would require significant changes in the way the businesses operated.
“That surely will have a detrimental impact on jobs within those companies and indirectly in the community as well,” Mr Northe said.
Energy and Resources Minister Lily D’Ambrosio labelled Mr Northe’s comments “scare mongering”, saying the increase would be able to be absorbed without any impact on jobs.
She said she spoke to the three mine operators before the announcement was made.
“Electricity prices will still be lower than other states and that is something very important in this,” Ms D’Ambrosio said.