Australian taxpayers fund $450 million compensation bill for Queensland power plant

Australian taxpayers will pay bills of up to $450 million (US$300 million) to cover potential losses incurred by power plants due to the Labor government’s energy price relief policy.

Mining giant Rio Tinto, a major shareholder of Gladstone Power Plant, will receive a lump sum payment to offset the impact of a 12-month coal price cap imposed under federal policy in 2023.

Gladstone Power Station is one of two fully private generators selling electricity to the grid in Queensland.

The 1,680 megawatt plant will typically generate power for Rio’s aluminum smelter at Gladstone. However, it is supplying power to the national grid to fill the gap left by the subsequent Callide Power Station. explosion Destroyed one of the generation units in May 2021.

Queensland Government and Commonwealth Share Bill

With the compensation plan in place, the Queensland and Commonwealth governments have agreed to split the bill 50/50.

“The federal and Queensland governments will share the cost of the rebate to Gladstone Power Station 50/50 based on actual costs,” a government spokesperson said in a statement obtained by AAP. .

“As part of this partnership on energy security, Commonwealth will work with the Queensland Government on a series of initiatives to support the transition to clean energy.”

The deal is still being negotiated between the state government, the federal government and Rio Tinto, so the final compensation amount is still subject to change, but officials expect Callide Power Station to return to full capacity. We expect the actual bill to be lower when

This is because the federal government is negotiating coal price caps with Queensland and New South Wales (NSW) as part of a plan to intervene in the energy market to lower electricity bills for homes and businesses. is.

The Queensland government has ordered state power plants to bid for the national grid using a new coal input price of $125 per tonne. federal funds For some infrastructure projects.

Unlike New South Wales, the Queensland government owns nearly all of the power plants in the state, so legislation does not have to be passed to introduce price caps.

Meanwhile, Intergen, owner of the Millmerran Power Station, another Queensland private power station that sells to the grid, said the power station operates on coal from its own mines and has to buy from the market. You will not receive compensation because there is no

Workers Energy Price Reduction Plan

In early December, the Labor government new policy After the 2022-2023 federal budget forecasts a 56% increase in electricity prices over the next two years, we will have to deal with soaring energy prices in the country.

Under the plan, the government will impose price caps on gas and coal used to generate electricity, reducing bills for homes and businesses.

Specifically, the plan would cap wholesale gas prices produced by East Coast gas companies at $12 per gigajoule for 12 months and cap coal prices at $125 per tonne.

Epoch Times photo
A view of the open pit lignite mine of the Yarlone Power Station in Yarlone, Australia, August 16, 2022. (Asanka Ratnayake/Getty Images)

At the same time, the government will enact a new mandatory code of conduct for the wholesale gas market and accelerate the reformed domestic introduction. Gas security mechanismThis will allow governments to intervene in the energy market when shortages are expected.

It will also secure up to $1.5 billion in co-funding from state governments to save hundreds of dollars’ worth of electricity bills for welfare beneficiaries and small businesses.

The government expects the plan to save the average Australian household $230 on energy bills in 2023, while reducing the impact of projected electricity price increases by 13 percentage points over 2023-2024. doing.

The Labor government quickly passed the bill after the plans were announced parliament December 15th, with the help of the Greens and some cross-ventures.

Backlash from the energy industry

The legislation has received strong backlash from Australia’s energy sector, which has criticized the government for “brute force” intervention in the energy market.

They also warned that the government’s new policy would hit domestic energy supplies on the country’s east coast.

The passage of legislation has forced many oil and gas companies to rethink their business strategies, and Senex Energy is the latest to announce a change.

December 22nd, Senex Energy announced that it will suspend a $1 billion expansion of its gas development in Queensland’s Surat Basin. This is expected to increase domestic gas production by 60 petajoules annually.

The company cited a new mandatory code of conduct for the wholesale gas market as the main reason for the suspension.

“Until we know the extent of future government action under a code of conduct that has not yet been formulated and the potential for retroactive application of measures, including breaking agreed contracts, it would be prudent to review all investments. ” said the CEO of Senex.Ian Davis said statement.

Epoch Times photo
Energy’s Australia Pacific liquefied natural gas facility on Curtis Island, North Queensland, Australia, October 10, 2016. (AAP Image/Origin Energy)

The Australian Petroleum Production and Exploration Association (APPEA) said Senex Energy’s decision showed the government’s “radical” move could jeopardize future investment in the sector.

APPEA CEO Samantha McCulloch said: statement.

“This decision by Senex Energy is exactly what the industry warned about when the government decided to take permanent control of the unprecedented gas market and regulate the return on these investments.”

Meanwhile, Energy Minister Chris Bowen responded to criticism of the new coal and gas price caps by saying he would not admit that the gas industry had made “huge profits” from the war in Ukraine.

“We will not allow gas companies to turn their backs on the Australian industry and make huge profits.” he said ABC radio.

“Without government response, we would have seen Australian industry collapse next year. Now we won’t let that happen.”

Alfred Bui

Alfred Bui is an Australian reporter based in Melbourne, focusing on local and business news. He is a former small business owner and holds his two master’s degrees in business and business law. Please contact [email protected]