Now that Origin Energy is being paid by taxpayers to keep Eraring coal fired power station open it should be forced to sell electricity at fair prices, to serve the interests of its taxpayers not just shareholders, Rewiring Australia said today. .
“The NSW government should now send a clear signal to the market and the community that this will not be repeated with other coal-fired power stations. Given that Eraring is now a public-private partnership the NSW government must ensure that the price it sells electricity for reflects the public interest” said Dan Cass, executive director of Rewiring Australia. “If Eraring is kept open on the coin of taxpayers, its owner, Origin, must be prevented from bidding to increase profit margin and should simply earn its cost back plus a minimum return.”
Under the privatised, free market design of the National Electricity Market, large coal and gas power stations are able to drive up prices in the wholesale market, to maximise profits. Almost all consumers are on contracts that protect them for high wholesale prices in the short term but over the long term they pay for high generator profits from high wholesale prices.
Under an agreement announced today, Origin’s Eraring coal-fired power station will be underwritten by the NSW Government to remain open until mid-2027, at a potential cost to the NSW public of $225 million per year. In return Origin will have to ensure Eraring generates at least six terawatt hours of electricity each year. In February, Origin posted a 17-fold increase in half yearly profit to $747 million, after benefiting from a sharp rise in revenue in its household-facing division.
“Market failure in the NEM has forced Australian states into a situation where they feel there is no option other than using public funds to prop up privately owned coal-fired power stations. This is a direct consequence of privatisation, where the interests of shareholders chafe against the public interest, which is to see the rapid and orderly retirement of coal fired power plants,”
“Fossil fuel energy providers are notorious for manipulating the energy market to gouge the public. Queensland’s state owned generators have been directed to refrain from this conduct and now that Eraring is underwritten by the NSW taxpayer, similar public protections should apply.”
“This extension will make it harder for NSW to meet emissions targets so they must show how they can accelerate action in other areas such as household electrification,” Cass said.
Energy Minister Penny Sharpe has made clear that the Eraring underwriting deal will not be extended beyond 2027.
Contact: Nick Lucchinelli 0422229032