Confidential ‘safety net’ agreement stuck between the Victorian Government and Yallourn Power Station to keep power station operational to mid 2028

In this article (belated, and back-dated) we’re trying to provide some initial documentation of the arrangement between the Victorian Government and EnergyAustralia with respect to Yallourn Power Station.

10th March 2021 – was this when agreement was reached?

On 10th March 2021, Angela Macdonald-Smith and Patrick Durkin wrote the article ‘Taylor demands energy suppliers ‘step up’ to fill Yallourn shortfall’ in the AFR.

Within this article, they note the following…

‘… after EnergyAustralia advised it had brought forward the shutdown of the 48-year-old generator from 2032.

The announcement stoked fears of a fresh spike in prices when Victoria loses 20 per cent of its supply in mid-2028.’

… and …

‘EnergyAustralia agreed to a $10 million support package with the Victorian state government to “transition” the 500 to 1000 jobs that depend on the Latrobe Valley generator, the second in the state’s traditional power-generation heartland to close, after Hazelwood in 2017.’

… and …

‘A confidential “safety net” agreement struck with the state government is intended to prevent an even earlier closure of the ageing generator which, like other coal-power plants, has been slammed by wholesale power prices that have sunk to six-year lows amid an influx of cheap renewables.’

That article on 10th March 2021 was then referenced a shortly afterwards (15th March 2021) when Angela Macdonald-Smith wrote ‘Yallourn deal threatens other generators’ in the AFR.

Within this article, Angela notes:

‘Sources say the “safety net” agreement – the latest in a string of state and federal government interventions into the energy sector – effectively means Yallourn is moving from a variable cost operation based on the price of burning coal to a position where it would always generate power even at negative gross margins.’

The article title sums up some of the concerns raised by others.  It was also this article that was referenced in the Grattan report ‘Keeping the lights on’ in April 2024 with respect to the confidential agreement between the Victorian Government and EnergyAustralia with respect to Yallourn:

10th March 2021 – reported in WattClarity

On the day of 10th March 2021, we had already written ‘Next domino? Yallourn closing in 2028 … four years earlier than original plan’ – so readers can refer there for more details (including to the articles linked therein).