Chris Minns fired up on coal compensation

NSW Labor leader Chris Minns has questioned the state and federal governments’ more than half-a-billion-dollar compensation package for coal-fired energy ­stations.

NSW Labor leader Chris Minns. Picture: Richard Dobson

NSW Labor leader Chris Minns has questioned whether the state and federal governments’ more than half-a-billion-dollar compensation package for coal-fired energy ­stations is the most sensible use of taxpayer dollars.

On Wednesday, The Australian revealed NSW power stations with coal supply contracts above the $125-tonne price cap imposed by the commonwealth in December would be reimbursed the difference, with government sources saying the figure would exceed $500m.

Mr Minns said the need for emergency taxpayer injections into once publicly owned energy assets sold on to private companies called into question the ­“fallacy” of privatisation as an economic philosophy.

“I think many taxpayers would be asking themselves: ‘Why did we sell off those generators in NSW?’ considering that’s the amount of money the new private owners would get as a result of this bailout,” he said.

“Taxpayers lose out, private companies get a massive windfall, and at the end of the day, power prices go up and taxes go up for regular consumers.”

Mr Minns pointed to the sale of the Liddell Power Station for $1m in 2014, and the Eraring Power Station, sold by the O’Farrell Liberal government in 2013 for $50m, as evidence of the NSW Coalition’s short-sightedness, but ruled out buying back these assets.

“There’s just not the balance sheet to do that,” he said.

One of the largest beneficiaries of the compensation package would be Centennial Coal, senior NSW government sources revealed, through its commercial supply relationship with the ­Eraring power station, the nation’s largest.

While the government will reimburse power station owners who hold existing supply contracts above the price caps directly, as opposed to coal producers directly, ultimately it is coal suppliers producing above the artificial market cap that will be saved by the government’s reimbursement as they will not be forced to operate at a loss.

Compensation schemes will differ among states, but power suppliers are expected to be paid “periodically” through a yet undisclosed mechanism.

Established in 1989, Centennial has a market capitalisation of $2.5bn. It operates several coalmines across NSW, providing around 30 per cent of the state’s coal-fired generating capacity.

NSW has four other major coal-fired power stations – Bayswater, Liddell, Mount Piper and Vales Point B – that would also need to receive compensation from taxpayers for any supply contracts that exceed the $125-a-tonne price cap.

As part of the arrangement, NSW government sources told The Australian, a deal had been struck for the state to receive about $350m of the federal government’s $1.5bn relief package for households and small businesses. It is understood the $350m will be directed by NSW towards energy rebates for vulnerable Australians, such as low-income households and pen­sion­ers, helping to offset a surge in their power bills in 2023.