The former Liberal energy minister Matt Kean,who wants to protect his legacy as a climate warrior,had been warning that taxpayers could be on the hook for as much as $3 billion if the state intervened to keep the Origin-owned Eraring coal-fired power station operating.
NSW Environment and Energy Minister Penny Sharpe and Treasurer Daniel Mookhey at Thursday’s press conference.Nick Moir
Kean,who is against keeping Eraring open,says those costs were provided to him when the Coalition was in government and were a major factor in his decision to plough ahead with renewables.
In what must be a vastly different deal,the price under NSW Labor to keep Australia’s biggest coal-fired power station switched on is much lower at $450 million over two years. That is dependent on Origin opting in to a risk-sharing agreement. The government assumes Origin will.
Under the agreement,the NSW government will not make any upfront payment to Origin. Instead,it will enter into a two-year “risk-sharing” arrangement.
Taxpayers would share 20 per cent of any profit Eraring makes during the life of the agreement,but that is capped at $40 million. Crucially,if the plant loses money,taxpayers will underwrite 80 per cent of those losses capped at $225 million a year. That would be appealing to Origin.
Origin Energy’s coal-fired power station Eraring is the largest in Australia. It will now stay open until August 2027.Dean Sewell
Worst-case scenario,NSW taxpayers will be up for $450 million over two years. The government has repeatedly said this is about keeping the lights on. In perfect timing,the national energy market operator this week warned of supply issues because of delays in transmission projects.
This warning ensured that NSW Labor could argue that throwing Eraring a lifeline was its only option,while blaming their predecessors for not ensuring the renewables roll-out kept pace. Both may be true.
However,a significantly smaller price tag will not protect the Minns government from political pain if NSW faces blackouts or bill shock. It cannot be sure neither will happen.
Its deal with Origin also does not enjoy bipartisan support. The Coalition,,was quick to warn that the government’s agreement “does not guarantee energy reliability or more affordable electricity for households and businesses”.
The Coalition,rightly,says it is Labor’s responsibility,given it is now the government,to ensure critical transmission infrastructure and battery storage projects such as Waratah super battery are delivered. And soon.
The government has promised big,guaranteeing no supply issues and no price spikes. The likely $450 million outlay will be a big cost if the government props up antiquated technology only for it let them down.
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