Victoria’s controversial brown coal-fired Hazelwood power station is the biggest beneficiary of the federal government’s billion dollars in cash assistance, paid to electricity generators likely to face financial stress as a result of the introduction of the carbon tax on July 1.
Hazelwood’s owner, National Power Australia Investments, a subsidiary of giant electric utility International Power-GDF Suez, will receive a cash payment of $265.9 million in June to help keep the power plant in operation.
International Power gets more than a third of the total assistance as it also owns 70 per cent of the Loy Yang B power station, also in Victoria’s La Trobe Valley, which receives $116.9 million.
Other brown-coal fired power stations to receive assistance include Truenergy’s Yallourn power station, which gets $257.5 million, and the Loy Yang A power station - to be wholly acquired by AGL Energy - which gets $240.1 million.
Brown coal is the most emissions-intensive form of electricity generation in Australia and, once the carbon price is introduced, the generators in the La Trobe Valley face potential write downs to asset value and higher financing charges.
The government’s clean energy future package provides $5.5 billion in assistance to cushion the impact of the carbon price on the electricity sector. This includes the up-front cash payments, about $2 billion in payments to close down 2000MW of generation capacity, loan guarantees and free pollution permits.
Fitch Ratings recently estimated Victoria’s brown coal fired generators faced refinancings of $2.7 billion this year.
“Energy Security Fund cash payments are part of a broader package designed to ensure secure energy supplies as the nation transforms to a low carbon future,” said Minister for Climate Change and Energy Efficiency, Greg Combet.
