Queensland power plants to generate budget bonus

Skyrocketing wholesale electricity costs and record coal prices will prop up Queensland’s debt-riddled budget when it is handed down next week.

Queensland Treasurer Cameron Dick will deliver the state budget on Tuesday. Picture: NCA NewsWire / Dan Peled

Skyrocketing wholesale electricity costs and record coal prices will prop up Queensland’s debt-riddled budget when it is handed down next week.

After years of declining profit, Queensland’s publicly owned ­energy generators – mostly coal-fired power stations – will deliver hundreds of millions of dollars in annual dividends to the cash-strapped government.

In the past three years, electricity generation dividends have dropped 96 per cent – from $620m in 2017-18 down to $23m in 2020-21 – because of lower wholesale prices driven by the ­influx of renewables.

But revenue from Queensland’s power generation is tipped to surge again in the June 21 budget, thanks to soaring wholesale electricity prices. A huge jump in royalty revenue is also anticipated in the budget after record high coal prices and a planned hike on royalty rates.

Treasurer Cameron Dick would not say whether the ­expected increase in dividends would be used to pay down state debt, projected to hit $127bn by 2025, or be funnelled into general revenue.

“I will have more to say about those dividends next week,” he said on Wednesday.

The Queensland Conser­vation Council has warned that the cash boost would be a short-term sugar hit to the state budget.

“We are only getting these dividends because Queensland ­industry is paying high prices for electricity,” energy strategist Clare Silcock said.

“Our ask is for the government to invest any profits it gets ­because of these extremely high prices into renewable energy to keep prices lower in the long term. We are dependent on coal and gas, which are becoming ­increasingly unreliable and ­expensive, and there is not enough cheap renewable energy to keep prices down.”

In the last budget, Queensland Treasury predicted the government would stop receiving dividends from state-owned power generators by the 2022-23 financial year.

“Electricity generation dividends are lower in 2020–21 and 2021–22 relative to previous years, with the entry of significant volumes of renewables boosting supply into the grid and putting sustained downward pressure on wholesale electricity prices,” the budget papers read.

“Lower wholesale prices ­driven by the influx of renewable generation impacts all generators in the sector.”

One of the Queensland government’s most reliable cash cows, state-owned power generator CS Energy, did not deliver a dividend last year and posted a net loss after tax of $266m.

Fellow energy generator Stanwell made a net profit after tax of $375m and paid a higher-than-forecast dividend of $108m, still significantly down from the $231m it paid in 2020.

Mr Dick in May announced a one-off $175 rebate on household power bills, at a cost of $385m.

He would not say if dividends, finalised in Tuesday’s budget, would be used for another rebate.

Opposition Treasury spokesman David Janetzki said extra revenue should be spent on fixing the state’s health crisis, building infrastructure and easing cost-of-living pressures.