Mount Piper power plant closure feared after court ruling

EnergyAustralia may be forced to shut one of its newest coal-fired power stations, supplying up to 1.2 million customers.

Coalminer Ron Smith at the Mount Piper power station in Lithgow, NSW. Picture: James Croucher

EnergyAustralia has warned it could be forced to shut one of the nation’s newest and most ­efficient black-coal-fired power stations supplying up to 1.2 million customers in NSW, following a Court of Appeal decision it claims has threatened its only supply of coal to the plant.

The potential closure would take up to 1400 megawatts out of the energy market, or the equivalent of 15 per cent of electricity supply to the NSW system.

The Australian has confirmed with EnergyAustralia executives that the prospect of a forced shutdown of the Mount Piper power station in central-western NSW, which has an operational life to 2042, was a “real risk” following legal action launched by green ­activist group 4nature against planning consent for an extension of the Springvale mine owned by Centennial Coal.

The uncertainty is believed ­already to be having an impact on power prices. EnergyAustralia, which also operates Yallourn in Victoria, is unable to sell two-year contracts to commercial customers. It is now stockpiling coal at the Mount Piper site as a contingency over the insecurity of supply from Springvale.

EnergyAustralia chairman Graham Bradley told The Australian that the company was now in a “diabolical” position which if unresolved could affect supply to more than one million customers in NSW. “It is an appalling situation,” Mr Bradley said. “It’s the newest clean-coal station in NSW and perhaps the whole nation. It would be a tragedy for it to be out of operation for want of coal supply.

“There are around one million residential customers relying on Mount Piper output to provide them with power … if we were to shut we do not have the back-up.

“We are in a diabolically compromised commercial position; unexpectedly so.”

Mr Bradley said the problem was the state planning system which had proven to be “dysfunctional” for some time when it came to significant projects.

“(But) I am confident at the end of the day that the state government has emergency powers to put a stay of execution on any ­adverse outcome,” he said.

Still looking to coal. Picture: The Australian

Lithgow coalminers told The Australian their livelihoods were being threatened by an increasing push away from non-renewable energy sources.

Lithgow councillor Ronald Smith, 58, has been working as a coalminer for 26 years. His sons Ben and Luke are also coalminers.

“What concerns me the most is the rising cost of power and the uncertainty of jobs within our area,” Mr Smith said. “We have already lost so many mining jobs and we see pensioners every day that have got to turn the stove on to heat their house because power is so dear. It’s a sad state of affairs.”

Between 200 and 300 jobs are at risk at the Mount Piper station.

While recent attention has been focused on Malcolm Turnbull’s intervention to try to extend the life of AGL’s Liddell coal-fired plant in the Hunter Valley, the ­potential loss of generation at Mount Piper has escaped the ­federal government’s attention despite the potential for a shock to the electricity market.

The Australian Energy Market Operator, in its report to government last week, warned there was already a 1000 megawatt shortfall across Victoria and NSW.

The NSW Court of Appeal last month ruled in favour of 4nature, which had opposed a decision by the NSW government in 2015 to extend the life of the Springvale colliery for a further 13 years, on the basis that it would contaminate water catchments in the Blue Mountains. The court found that the original consent granted by the Land and Environment Court was invalid. A further hearing is now required to consider orders in relation to the finding, which could ­determine the future of the mine, and as a consequence the Mount Piper power station.

The head of EnergyAustralia’s energy business, Mark Collette, said closure of Mount Piper would be a disaster for NSW power supply. “It … is critical to system ­reliability, especially during peak periods,” Mr Collette said.

“Closing it would have a drastic impact on energy system ­reliability and affordability, and hundreds of direct and indirect jobs in and around Lithgow.

“In the past, there were six mines able to supply coal to Mount Piper; now it’s one, and it’s under threat of closing.”

Mr Collette said EnergyAustralia had invited the Prime Minister to Mount Piper “so he can understand first-hand the difficulty involved in getting reliable service from existing coal plants and in securing coal supply”. “Certainly, we’d welcome the government’s support in addressing coal supply at Mount Piper,” he said.

Both Centennial Coal and ­EnergyAustralia said reports of an approach by Chinese investors to expand Mount Piper based on a 2010 approval by the NSW government to build two more turbines were ridiculous. “It’s mind-boggling to be asked about expansions to existing power stations or new coal projects when we have struggled to ­secure coal supply for the plant we already have at Mount Piper,” Mr Collette said.

Centennial Coal warned that the issue was now time-critical. Unless it was resolved by the end of this month, the company would have to consider its options in terms of the future of the mine. Centennial executive general manager, external affairs, Katie Brassil, said: “It is a train wreck waiting to happen. It is serious and if there was ever a time for a government to show political leadership to ensure energy security and reliability, this would be it.

“The mine and Mount Piper’s futures are intrinsically linked.”

NSW Energy Minister Don Harwin would not say what action was available to the government in the event of an adverse decision and said the government was waiting the outcome of the court hearings. “The Mount Piper power station is currently operating as it should,” he said. “The NSW government is monitoring the court hearing.”