Eraring coal power station to remain open until 2027

The NSW government has signed an agreement to keep the Eraring power station open until August 2027.

The NSW government has signed an agreement to keep the Eraring power station open until August 2027.

The deal, designed to protect NSW from blackouts amid delays in renewable energy projects, will not require any upfront cash from the taxpayer.

Instead the NSW government will underwrite the power station.

If comes after the energy market operator warned of an increase risk of blackouts from 2025-26 when Eraring was due to close.

The deal requires origin to share up to $40 million in profits if it opts into the underwriting agreement.

Origin Energy's Eraring power station.

Taxpayers would be on the hook for up to 80 per cent of any losses, capped at $225 million each year.

Under the agreement, Origin must also ensure Eraring endeavours to generate at least 6 terawatt hours each year, half of its total capacity.

However, there is nothing in the agreement to penalise Origin if they do not produce the required terawatt hours each year. Treasurer Daniel Moohkey said no such penalties were required as Origin were still legally obliged to meet their commitments to the market.

It must also “substantially maintain” the existing workforce of around 200 people.

Mr Mookhey insisted taxpayers had not been handed a lopsided deal, in which they could be liable to pay more for Origin’s losses than they would gain from its profits.

“The reason why we insisted on a profit share arrangement is to ensure that Origin doesn’t think this is an easy ride,” he said.

“The whole idea of that profit share isn’t to make a return for the taxpayers, it is to ensure that Origin doesn’t precipitously trigger this agreement, therefore it is another layer of protection for taxpayers.”

Mr Mookhey said the deal was only required because the former Coalition government privatised the power plant.

“I would have much preferred us to be owning this power station and as to be able to make the decisions,” he said.

Mr Mookhey called for the Opposition to back in the deal, saying “bipartisanship really helps here”.

Treasurer Mookhey hit back at suggestions from former Treasurer Matt Kean the extension of Eraring would delay the renewable energy rollout.

“The reality is Matt Kean bungled the energy transition. We’ve spent an inordinate amount of time in our government rescuing it. We are …. intervening in multiple ways to speed up the rollout of renewal. In making the decision we’re making today, we are ensuring that energy transition can continue without exposing businesses and households to severe (price shock),” Mr Mookhey said.

Premier Chris Minns said the decision delivered certainty for households and businesses.

“The people of NSW now have certainty that the NSW Government has a plan to ensure we have reliable energy while we transition the workforce and the economy to net zero,” he said.

Energy Minister Penny Sharpe said the deal is a “sensible step to ensure a plan is in place, if needed, to avoid electricity outages and rising power prices”.

NSW Premier Chris Minns. Picture: NCA Newswire/ Gaye Gerard

The underwriting agreement to keep Eraring open also requires Origin to put in place maintenance plans to keep the plant running.

Ms Sharpe said the deal gave certainty to workers, and coal mines supplying the plant.

Despite this she said there’d be no government ultimatum to Origin to continue using Centennial Coal as a supplier at the power station.

Centennial currently supplies about 20 per cent of the coal used at Eraring, but Origin is yet to renew their contract, which expires next month.

The union and Centennial fear 1000 jobs could be lost if the contract isn’t renewed.

While saying 220 jobs at the power station itself would be protected, Ms Sharpe said the government wouldn’t insist that Centennial continue to be contracted as part of their deal with Origin.

“The agreement that we have is about making sure that Origin can guarantee that they’ve got the coal supply that they need. And we’ve set up the conditions for them to negotiate with Centennial and other coal providers to make sure they get there,” Ms Sharpe said.

“The government requires that Origin need to make their coal supply agreements and we encourage them to speak to the coal suppliers to get that done. But the point that I would again make is that the NSW Government has set that up for those jobs by the extension of the power station.”

Eraring Power Station. Picture: Richard Dobson

Collieries’ Staff and Officials Association (CSOA) lead organiser Belinda Giblin said “the rubber now hits the road for Origin Energy”, who she urged to “provide certainty to 1,000 coal mining workers and their families” for employees at Centennial Coal.

“There is now no excuse not to provide immediate certainty for (Centennial Coal’s) Myuna and Mandalong coal mine workers, their families, and their community,” she said.

“If no deal is reached by the end of June, 350 jobs will immediately go at Myuna, and 650 more at Mandalong will be under immediate threat.

“We urge the NSW Government and Origin Energy to provide certainty to these 1,000 coal mining workers and their families before it’s too late.”

In a statement to the ASX, Origin chief executive Frank Calabria said Origin retained the right to determine the final timeline for the retirement of all four units of Eraring Power Station, however no compensation would be payable after 2027 and the plant must retire in full no later than April 29.

“This agreement supports Eraring to continue to play an important role in maintaining reliable power for businesses and households through a period in which there remains considerable uncertainty about the volume and timing of new renewables, transmission and firming infrastructure coming online,” he said.

Despite government calls for bipartisanship any hope of a unity ticket between the Coalition and Labor has been dashed, with Liberal Energy spokesman James Griffin calling the deal a “shocker”.

“This deal doesn’t even guarantee energy supply, only that the operator will endeavour to provide energy,” Mr Griffin said.

NSW Opposition leader Mark Speakman criticised the agreement, arguing the government should have put out tenders to see if other suppliers could have continued to run Eraring for a better deal.

“A good deal would be one if you had gone to the market and tested what else was available and that is what the government has failed to do,” he said.

Eraring is NSW’s largest coal power station.

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