Other the the ongoing Monash discussion on this thread I was wondering if anyone had any thoughts on the article below and what impact (if any) it will have on ESI...
MARCUS PRIEST Australia’s dirtiest power stations, Hazelwood and Yallourn in Victoria’s Latrobe Valley, will not be paid by the federal government to shut down because of the failure of negotiations with their owners.
Resources and Energy Minister Martin Ferguson is today expected to disclose the outcome of talks with power generators over contracts for closure, a big step for the industry that could lead to the shutdown of some power stations under the government’s plan to reduce emissions of greenhouse gases.
Negotiations with Hazelwood, which is owned by International Power, and Yallourn, which is owned by TRUenergy, failed to agree on a price acceptable to both sides.
Negotiations have been complicated by the fall in international carbon prices, which increased the value of coal power stations.
The state of talks with Alinta, which owns Playford in South Australia, Collinsville in Queensland, which is owned by RATCH, and Energy Brix, is unclear. The government wants to shut up to 2000 megawatts of brown coal generation.
The federal government has set aside an undisclosed amount for the closures in its budget contingency reserve.
Alinta has said it will only run its South Australian generator, Northern, during periods of high demand for electricity. Collinsville has reduced its capacity. The federal government recently paid $50 million in a bailout package for Energy Brix.
The industry has been angered by the government’s rushed changes to the carbon price scheme and is concerned the timetable is being dictated by the European Union.
Companies and industry groups have been given eight days to digest the proposed changes and have to make submissions on 116 pages of draft legislation by the end of Wednesday .
Late on Friday the government released draft legislation abolishing the $15 floor price for when trading starts in 2015, recognising European emission permits and bringing forward the sale of 40 million 2015 carbon permits.
On Tuesday one industry representative, who declined to be named, said companies had been informed by a government official at a consultation session last week the timetable was due to the EU and the need to negotiate a bilateral treaty.
Companies were also told the government had been unable to consult on the changes before now because of “commercial sensitivities’’.
“I have never come across anything like this,” the industry source said. “Imagine if the Department of Foreign Affairs and Trade tried to do this with a bilateral agreement.”
Business Council of Australia spokesman Scott Thompson said it was not clear why such a short period was being given for consideration of the amendments.
“These are important changes with long-term implications for business and the community,” Mr Thompson said.
“It would be disappointing to find European Union requirements mean that Australian business is not being properly consulted,” he said.
Australian Petroleum Production and Exploration Association chief executive David Byers said the timetable was “too tight to allow any meaningful consideration”.
A spokesman for Climate Change Minister Greg Combet said the government would continue to consider any issues raised by stakeholders as the amendments went through the legislative process, including through any Senate committee consideration.
“Any suggestion that the EU has influenced the legislative timetable is incorrect,” he said.
International Emissions Trading Association spokesman Rob Fowler said that, while there were some “wrinkles” in the draft legislation to be ironed out, companies would benefit from the “unfreezing” of the local carbon market.
“I can’t see any problems going ahead quickly and I can see some real benefits from it,” he said.
A report from carbon analyst RepuTex said the changes would save Australian companies $2.5 billion over five years, with European permits trading between $17 and $7 between 2016 and 2020.
The Australian Financial Review
ESI Price at posting:
1.2¢ Sentiment: Hold Disclosure: Held
(20min delay)