JV partner in troubled Callide power station collapses

The joint venture partner in control of one of Queensland’s major power stations has collapsed sparking fears already elevated electricity prices will be put under further pressure.

COAL FIRED: Callide Power Stations B and C.

The joint venture partner in control of one of Queensland’s major power stations has collapsed after a dispute over future funding for the troubled asset.

Deloitte turnaround and restructuring partners Grant Sparks and Richard Hughes have been appointed voluntary administrators over a number of IG Energy Group entities, which own half of the troubled Callide C coal-fired power station near Biloela.

The failure of IG Energy is expected to put further pressure on already elevated power prices leading into the winter.

A section of the station suffered major damage from a fire in May 2021 with efforts now underway to bring the unit back into service. Another part of the plant was forced offline after a cooling system collapsed.

Deloitte said the companies now in administrations include IG Power (Callide), IG Energy Holdings (Australia), IG Power Holdings, IG Power Marketing (Australia).

CS Energy, which owns the other half of Callide C, also operates the power station and Callide B on the same site.

Deloitte said Callide C has experienced “operational challenges” since May 2021 following the two infrastructure failures. CS Energy recently announced it expected Callide C to be back on line in September 2023. Deloitte said the directors had appointed the administrators due to an ongoing failure of shareholders to agree future funding of the joint venture.

“At this early stage in the external administration process, we have been communicating with all stakeholders to assure them we will be pursuing a restructuring solution that would ensure minimal disruption to any plans to bring the power station, which remains under CS Energy’s operational control, back on line later this year,” said Mr Hughes.

A CS Energy spokesperson said the company remains “committed to the safe and timely reinstatement” of Callide C and was working through “options to achieve this.” “For our people at Callide C it remains business as usual,” the spokesperson said.

Callide Power Station is comprised of two power plants, Callide B and C, each with two generating units B1 and B2, C3 and C4. CS Energy’s portfolio also includes the Kogan Creek Power Station near Chinchilla.

Queensland’s CS Energy confirmed earlier this month that the restart of its 466MW C3 unit at Callide would be delayed from June to September, while its replacement C4 unit, which suffered major damage from a fire in May 2021, would return to service in October instead of May.

The announcement led to an increase in electricity futures prices for this winter of $10 per megawatt hour for the Queensland market.

Businesses and consumers were already bracing for more hip pocket pain, with the Australian Energy Regulator warning of pressure on the default market offer, affecting close to 600,000 households in NSW, southeast Queensland and South Australia.

Grattan Institute energy program director Tony Wood, who has encouraged companies to consider delaying the planned closure of coal-fired power plants in order to help avoid blackouts and energy shortfalls, told The Australian earlier this month that the absence of coal-fired generation put energy markets at risk in the coming months.

“We had a really big problem mid-year last year with coal-fired power station outages, where it wasn’t actually the coal-fired power stations themselves but the coal supply that was a problem because of the terrible rainfall that flooded the coal mines,” Mr Wood said.

Comment has been sought from Queensland Energy Minister Mick De Brenni.