No Eraring extension money in budget as NSW Treasurer targets bill relief, renewables

No money has been set aside to keep Eraring open past its 2025 closure date as Treasurer Daniel Mookhey warned its owner Origin Energy he would not negotiate.

No money has been set aside in the NSW budget to keep Eraring open past its 2025 closure date as Treasurer Daniel Mookhey warned its owner Origin Energy he would not negotiate through Tuesday’s set of state books.

It comes after The Australian revealed on Monday that Mr Moohkey warned the government had “lost control” of its energy future to private business.

“We’re not using this budget to negotiate with Origin (over Eraring),” Mr Mookhey said in his post-budget press conference, warning them not to “game the people of NSW”.

The NSW Treasurer has also taken aim at “volatile electricity prices” in his first state budget with millions confirmed in bill relief amid further billions secured for the energy transition – the largest amount in state history.

Mr Mookhey pointed the finger at decades of energy-asset privatisation, echoing comments made to this publication: “we have lost control of our energy future to private companies”, who, the treasurer blamed in his parliament budget address, are “charging those with the least the most”.

NSW Treasurer Daniel Mookhey and NSW Finance Minister Courtney Houssos address the media about the NSW budget on September 19. Picture: Gaye Gerard

The lack of funding allocated to any potential Eraring extension aligns with the government’s most recited line: “not a cent or day more than we have to”, although the prospect of the taxpayer helping prop up the 40-year-old station’s life appears likely.

The NSW Coalition said the absence of any funding to account for Eraring’s extension showed the budget was based on “dubious assumptions”.

“I think it shows how unreliable some of the figures are,” NSW Liberal leader Mark Speakman said. “An extension could cost millions of dollars.”

The opposition criticised the government's announcement that they would engage Origin to extend Eraring – claiming it “sabotaged” their bargaining prospects to secure a better deal for the taxpayer.

On Tuesday, Mr Mookhey and NSW Finance Minister Courtney Houssos revealed the government would have a two-pronged focus on renewables and relief across the next four years, handing down a budget with billions to accelerate the state’s transition, as well as relief for businesses and families as energy bills continued to creep.

The budget warned that a “slow and disorderly transition” would only exacerbate “volatile energy prices”, and would leave the economy 0.9 per cent smaller by 2061.

Origin Energy's Eraring power station.

“Economic growth (in the long-term) hinges on how well we manage our energy transition,” Mr Mookhey said, noting one of the biggest investors into the state was renewable-based.

Introduced in July 2023 in partnership with its federal counterparts, 1.6m eligible families, veterans, low-income households and self-funded retirees would receive an automatic $500 rebate this financial year, with more than 300,000 eligible businesses receiving their own one-off $650 payment.

Relief for consumers would be prolonged beyond the previously set end date, with the family, seniors, low-income household, medical energy rebates all extending onwards from July 2024, and increasing.

Those rebates are part of a $100m-worth package, which forms part of the $1.1bn to be spent this year by the Minns government to “alleviate pain felt from privatised electricity utilities”.

The state’s renewable drive is, according to the treasurer, the largest investment in NSW’s renewable energy in history, including $804m for the state’s Renewable Energy Zones and $1bn to establish the Energy Security Corporation.

Business NSW CEO Daniel Hunter said the transition would require careful management, calling it the “defining test” of the Minns government.

“The only way the government will be confident to move past coal is when they have the alternatives in place to replace them,” Mr Hunter said, describing extending Eraring as a “prudent decision” – given concerns over short- and medium-term supply.

“Speeding up transmission and firming infrastructure will help, but these projects take time to build and we need to maintain secure supply over the intervening period,” Mr Hunter said.

A further $263.5m will “supercharge” a wider electric vehicle infrastructure rollout, particularly across regional NSW, although EV subsidies have been slashed.

The state government expects that an increase in coal royalty rates by 2.6 percentage points, from July 2024, would raise an extra $2.7 billion over the next four years and provide an ongoing lift in royalty revenue over the long-term – with the base rate raising to 10.8 per cent from the next financial year.

Billions is contained in the budget to accelerate the transition to renewables. Pictured is a solar farm in Broken Hill, regional NSW.

On the pre-election budget figure, and using the current rates, the government had projected a $2.3bn decline in mineral royalties across the four-year forecast period.

However, NSW Nationals leader Dugald Saunders said the move to increase royalties was not offset with help in the budget for the industry’s communities.

“They’re taking in one hand but giving no help in the other for those mining and coal communities,” he said.

“Under this government NSW stands for Newcastle, Sydney and Wollongong – the rest of the state is forgotten about.”

NSW Minerals Council CEO Stephen Galilee also criticised the move, saying mining communities were propping up budget repair.

“The billions delivered in royalty revenue are only possible due to the contribution of the hard working people of our regional mining communities,” he said.

Mr Galilee said the abolition of the Resources for Regions, Critical Minerals Activation and Coal Innovation programs – when mining royalties was forecast to deliver the government $13.2bn over the next four years – was “unfair... directly affecting the quality of life (of those in the communities)”.