September 08, 2008 12:00amENERGY minister Peter Batchelor won't...

September 08, 2008 12:00am
ENERGY minister Peter Batchelor won't deny speculation that Yallourn and Hazelwood power stations may close in the next 18 months.

Asked by BusinessDaily if the rumours circulating among employees at the Latrobe Valley's Yallourn and Hazelwood were true, Mr Batchelor responded: "That is a question you have to direct to the power stations".

"We want them to keep operating but we don't know," he said in an exclusive interview.

In July, the Energy Supply Association of Australia released a report warning three of the four Latrobe Valley power stations could close by 2020 because of the heavy cost of running brown-coal fired plants under a carbon emissions trading scheme.

But there are fears Yallourn and Hazelwood could shut their doors before the end of calendar 2009, because the ageing power stations are already relatively expensive to run and could find the added cost of a carbon tax too much to bear.

Together, the two operations produce about half of the state's electricity supply, yet parts of them are more than 40 years old.

Last month, a BusinessDaily investigation uncovered maintenance problems at both power plants that industry insiders have linked to uncertainty over their future under a carbon emissions trading scheme.

Commenting on recent maintenance cutbacks at Yallourn, Mr Batchelor said it was up to the plant's owner to decide their own budget.

Yallourn is owned by TruEnergy, a subsidiary of Hong Kong-based energy group CLP Power.

"We're not making that decision - that is a decision the owners will make," Mr Batchelor said.

"At the moment, our biggest concern is the emissions trading scheme."

He added he was not concerned about the security of Victoria's electricity supply, because power stations were required to report all maintenance issues to Nemmco, the body responsible for the nation's wholesale electricity market.

On Friday, Professor Ross Garnaut recommended Australia target a 10 per cent reduction in carbon emissions by 2020.

The lower-than-anticipated figure has been welcomed by the business community but slammed by environmentalists.

The Latrobe Valley's brown-coal fired power plants would likely receive more transitional assistance under the new regime than the cleaner-burning black-coal fired power plants in Queensland and NSW, Mr Batchelor said.

The Victorian government is currently conducting trials of geosequestration, also known as carbon capture and storage, in the Otway Basin.

Geosequestration is the injection and storage of carbon dioxide into underground geological formations.

http://www.news.com.au/heraldsun/story/0,21985,24308122-664,00.html