Hazelwood power station closure: Latrobe Valley workers brace for axe to fall

LATEST: CLOSE to 500 workers in the Latrobe Valley are set to be out of a job after the announcement that the Hazelwood power station will shut down forever in March.

Hazelwood power station from the main street of Morwell. Picture: Rob Leeson

HAZELWOOD power station will shut down forever in March, with hundreds of Latrobe Valley workers told they will be out of a job.

Plant owners Engie and Mitsui have officially announced the closure, saying up to 250 of their 750-strong fulltime workforce will be kept on to rehabilitate the mine and power station site between 2017 and 2023.

But in a move that will send further shockwaves through the Latrobe Valley and the nation’s energy market, Engie also revealed plans to sell another coal-fired station it owns — Loy Yang B — by the end of next year.

Chief Executive of Engie in Australia, Alex Keisser, said Hazelwood was now more than 50 years old and was no longer viable.

“It has been a wonderful contributor to the National Electricity Market but we have now reached the point where it is no longer economic to operate,” Mr Keisser said.

Mr Keisser said the removal of Hazelwood from the market, and because Loy Yang B was the “newest and most efficient brown coal fired-power station in the Latrobe Valley”, the firm expected to sell the asset as it “will be attractive to potential investors”.

Engie also revealed plans to sell Loy Yang B by the end of next year. Picture: Jayden Robert Sinclair

“However, it is important to stress that we would only consider a sale of these valuable assets if they met our shareholders’ requirements,” he said.

“If a sale process were to proceed, it would be expected to be completed by late 2017.”

State and Federal governments are preparing to provide assistance packages for the community, including career counselling, financial advice and retraining subsidies for affected workers.

Premier Daniel Andrews said the Victorian Government had been preparing for the closure “for some months”.

“We had hoped for a different outcome, but we were planning for exactly the outcome Engie has made, which is that the power station would close in full some time next year,” Mr Andrews said.

“Today is a very difficult day for 750 workers and their families who have learnt today they will lose their jobs at the end of March next year`.”

During his visit to Morwell this afternoon, Mr Andrews announced the establishment of the Latrobe Valley Authority to assist those affected by Hazelwood’s closure.

The Andrews Government has announced a $22 million support package for Hazelwood workers and affected businesses.

This will include a worker transition centre in Morwell and an expansion of the Back to Work program to provide incentives to businesses that employ workers in the Latrobe Valley.

The Turnbull Government has announced $43 million to support the Latrobe Valley in the wake of the closure, including $20 million for local infrastructure, $3 million to help employees and a $20 million regional jobs and investment package.

Prime Minister Malcolm Turnbull has also created a ministerial committee to oversee the Federal Government’s response to be chaired by Energy Minister Josh Frydenberg.

Mr Frydenberg said today’s announcement was “the end of an era”.

“It is a very sad day for the workers, their families and for the community of the Latrobe Valley,” he said.

“Hazelwood first began generating power for Victoria in 1964, and now provides some 22 per cent of Victoria’s electricity demand and around 4 per cent of electricity demand across the national electricity market.

“The Turnbull Government’s focus is in three key areas: firstly, supporting those affected workers and strengthening the job and employment opportunities across the Latrobe Valley; secondly, energy security and ensuring the stability of the system both in Victoria and across the national electricity market; and third, electricity pricing, understanding that affordability of electricity is absolutely critical to the health of the Victorian and national economy and to cost of living for families.”

Victorian Trades Hall Council secretary Luke Hilakari warned the region could be turned into “ghost towns” if the workers weren’t supported.

“The first thing we need is for current workers at Hazelwood to have certainty about future employment opportunities,” he said.

“We call on the State and Federal Governments to co-ordinate potential job opportunities with the other energy companies and local employers.

Victorian Trades Hall Council secretary Luke Hilakari warned the region could be turned into “ghost towns” if the workers weren’t supported.”

“We do not want to see La Trobe Valley communities ending up like Detroit, ending up ghost towns, we’ve got to commit to a transition plan that supports these communities.”

CFMEU Victorian mining and energy division president Trevor Williams said workers had been “left on the lurch” over the plant closure and is calling for as many staff as possible to be retained in the local power industry.

“This is just another kick in the guts for the Latrobe Valley,” Mr Williams said.

“My understanding is it is going to be a total closure of the station and mine, which is something we do not support.

“We would like to see Hazelwood continue to run, if it needs to be closed, we believe it should be done in a phased out way, which would give us an opportunity to make arrangements for the workers in the plant to be redeployed to other power stations in the Latrobe Valley.

“The workers in the plant would be devastated, although some of us have seen this coming for quite some time.”

Mr Williams said the union was disappointed workers weren’t given more notice of the closure.

“The community has been promised over and over again that new industry would be attracted to the valley, and nothing’s been done for the last 20 years since privatisation,” he said.

Voices of the Valley president Wendy Farmer said the company’s announcement that it will close the Hazelwood power station was expected.

“We’ve known that Hazelwood would eventually close,” she said.

“This is not a campaign win for any particular group, it’s a historical fact and it’s a business decision made by a foreign company, simple as that.

“Engie’s announcement today that it will fully close Hazelwood by March 31 2017 reaffirms the urgency for a Latrobe Valley Transition plan to be created and implemented. We absolutely do not want to see a thousand people lose their jobs without a strategy for re-employment. We have been calling on the State and Federal governments to work with the Latrobe Valley community to create and implement a comprehensive transition plan that keeps people employed and keeps people hopeful for their futures and the future of the Latrobe Valley.”

Ex-worker Dave Swainsbury outside Hazelwood power station. Picture: Rob Leeson.

Opposition Leader Matthew Guy said his family had worked in the Latrobe Valley power industry for decades and people in the community “will be gutted”.

He said Premier Daniel Andrews should have tried harder to ensure a staged closure rather than a sudden exit.

“The most sensible outcome was a staged closure that took years — it’s clear that Daniel Andrews didn’t fight for that and he didn’t fight for these ... jobs,” he said.

“The closure of Hazelwood will cost thousands of direct and indirect Latrobe Valley jobs and cause household power bills to increase by up to 25 per cent. Higher power prices may very well signal the end of manufacturing in Victoria.”

Committee for Gippsland chief executive Mary Aldred called on the state and federal governments to provide immediate economic injections into the region including increased infrastructure spending.

“Obviously a staged approach to the shutdown over a period of time would have been preferable as a buffer to both the electricity market, local jobs and local economy but that is the decision the company has now made,” Ms Aldred said.

“The first priority has to be the affected employees. This will have a major impact on the Latrobe Valley and the broader Gippsland region.

“The state and federal governments need to work together, we don’t want to see an ad hoc and multiple transitional response, it has to be a joint response.”

Ms Aldred said many of the workers were well paid and the flow-on effects to the broader economy, including retail, would be significant.

“Overall, the focus has to be on jobs and the local economy. There needs to be a response from government that includes infrastructure as major driver to invest in jobs in Gippsland,” she said.

“The most affected are the direct employees and contractors but flowing on from that are hundreds of small businesses. They will be affected and governments’ attention needs to be on assisting retail businesses and contractors as part of its response.”

A Frontier Economics report says household power prices may surge by up to 25 per cent in the aftermath of a shutdown next year, while there are also concerns about up to $100 million being sucked out of the local economy each year.

But Energy Minister Lily D’Ambrosio said separate modelling done for the state Environment Department says household energy bills may only rise by 4 per cent or “less than $1 per week”.

Hazelwood owners Engie and Mitsui & Co are expected to formally announce they will abandon the plant, and Premier Daniel Andrews will visit affected areas today to discuss job transition plans.

The Herald Sun can also reveal the Turnbull Government is considering fast-tracking “a pipeline of capital works projects” earmarked for six Gippsland councils to stimulate the local economy.

This could include highway duplications, foreshore upgrades, improved rail infrastructure and a new hospital in West Gippsland.

The Andrews Government has pledged $40 million to help the Latrobe Valley, while the Turnbull Government is expected to match that funding.

It is also likely a federal government department or agency office will be moved to Morwell or Moe, similar to the way the National Disability Insurance Scheme headquarters were shifted to Geelong.

Morwell newsagent Ray Burgess. Picture: Rob Leeson

Moves are under way to limit the shock to the jobs market, with the shutdown of the car industry and concerns about the longevity of Alcoa’s aluminium smelter also swirling.

Ms D’Ambrosio said Carbon and Energy Markets modelling suggested a retail bill rise of as little as 3.98 per cent or “less than $1 a week”. “While that seems small, we know there are Victorian families already doing it tough,” she said.

State Treasurer Tim Pallas said an “announcement is imminent” but it was a decision that the station owners would make in their own time.

He said electricity prices would be affected by the mine and power station closures, but extra capacity in Victoria’s energy network could limit supply problems.
“There is a substantial capacity in the network to absorb a closure,” he said.

Shadow Treasurer Michael O’Brien said that given the power station could provide about a quarter of the state’s energy needs, however, problems could loom.

“If you were sitting on a four-legged chair and one leg falls off, the chair’s not going to stay upright for very long,” he said.

Environment Victoria’s chief executive, Mark Wakeham, said arguments over pricing increases were “overblown” but he said the community would be significantly hurt by the closure and major environmental rehabilitation would be needed at the power station and mine site.

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