Two of the three coal-fired power stations likely to be still running the Hunter and Central Coast regions by 2025 could be worthless stranded assets, new economic analysis shows.

The Institute for Energy Economics and Financial Analysis (IEEFA) has released a report today that shows Eraring and Vales Point B power stations will be running multi-million dollar annual losses by 2025. [1] 

Only Bayswater is forecast to turn a profit, but that could be as little as $100m a year, $500 million less a year than in 2018.

The analysis echoes comments last week by Australian Energy Security Board Chairperson Kerry Schott who said coal-fired power stations “will probably go four or five years earlier [than their scheduled closure date] because they are not making any money and they may go before that”. [2] 

Nature Conservation Council Chief Executive Chris Gambian said: “The people of the Hunter region are being let down by political leaders who have failed to prepare for the inevitable changes facing their community.

“There are huge opportunities beyond coal for the Hunter community, but they will require investment by the government and business.

“The Hunter region can’t reach its post-coal potential alone — it needs substantial support from the state and federal governments. That support is conspicuously lacking.

“Change in our energy systems is gathering pace so coal communities need government help to get on board or they will be left behind.

“Germany created a 40 billion euro fund to help its coal communities develop new economic opportunities, and Poland last week announced a $20b transition package to ensure communities aren’t left stranded . 

“We need something similar to ensure our communities don’t suffer because of the rapid international shift away from coal.

“We call on the NSW and Federal governments to set aside a substantial fund, with billions of dollars to ensure no worker is left high and dry and to create jobs in coal regions.”

References

[1] Fast Erosion of Coal Plant Profits in the National Electricity Market, IEEFA, February 2021. See Figure 1, page 3. 

[2] Coal power stations going broke: Schott, AFR, 16-2-21

The NSW Environment Protection Authority has agreed to public consultation before determining whether to let Vales Point power station keep emitting high levels of nitrogen dioxide (NO2) for another five years.

Under pressure from Central Coast families, local community group Future Sooner and the Nature Conservation Council, the EPA agreed that members of the public and health and environment groups should have a say. 

“This is a great outcome for the Central Coast community, especially children with asthma who are at the front line in terms of health impacts,” NCC Chief Executive Chris Gambian said. 

“We are very keen to engage constructively and help residents participate in the consultation process so they get the results they deserve.” 

EPA Chief Executive Officer Tracy Mackey has written to NCC conceding “there is benefit in seeking public submissions on the proposal”, even if it is not legally required. 

“For 10 years, the EPA has exempted Vales Point from the Clean Air Regulation, allowing it to emit NO2 at twice the rate of other facilities,” Mr Gambian said. 

“The company has applied for another five-year exemption but the community has had enough. 

“People want Vales Point to clean up its act so their kids can breathe easy.”

 In January 2021, Newcastle epidemiologist Dr Ben Ewald found that about 650 kids on the Central Coast had asthma because of NO2 emissions from coal-fired power stations.  [1]

NCC, Future Sooner and local residents want the EPA to reject Vales’ application.

“Vales could instal NO2 burners for $33 million and operate them for $2.5 million a year, which is peanuts for a company that last year made $141 million profit before tax,” Mr Gambian said. [2] [3]

“Local residents should not be forced to pay for coal-fired power with health, especially when the owners of Vales can clearly afford to make their facility safe for kids.”

REFERENCES 

[1] Power station NO2 emissions and paediatric asthma in Central Coast, Hunter Valley and Sydney Local Government Areas, briefing note by Dr Ben Ewald, January 2021

[2] Jacobs report, GIPA EPA431, table ES-2, page 10

[3] Vales Point power station’s billionaire beggars receive $62 million dividend for FY2019-20, NCC media release, 1-12-20  

The NSW Planning Department must reject the application to double production of the Mount Pleasant open-cut coal mine near Muswellbrook because it will have unacceptable health and climate impacts. [1] 

“With three mines basically on the edge of town, people who live in Muswellbrook are already choking on coal dust and some of the worse air quality in Australia,” Nature Conservation Council Chief Executive Chris Gambian said.  

“Dust from coal mining is the leading cause of very high rates of respiratory disease in the town.

“Air quality in Muswellbrook has breached the national standards for fine particles (PM2.5) every year since the standard was introduced. [2] 

“Muswellbrook locals need clean air, not more coal. This project will not only be bad for people’s health, it will be bad for the climate. 

“Coal is stoking the fires of climate change, which is a threat to our way of life, to our native plants and animals, and to our economy. 

“We need to be planning for the future, not living in the past. We should be investing in our clean, renewable energy future, not opening or expanding coals mines. 

“The bushfire season last year that wiped out a third of our koalas and killed possibly billions of native animals was made more extreme by climate change. 

“We cannot afford to stoke the fires of climate change any more.

The Hunter desperately needs a plan for the jobs and economic growth of the future.  

“Propping up the coal industry as the world moves away from coal is a betrayal of the next generation of Australians who need us to be planning for their prosperity now. 

“We know all too well that the mining industry will shut mines down when they don’t make money. What happens then? 

“The aggressively pro-coal agenda being pushed by the likes of Hunter MP Joel Fitzgibbon is shortsighted and dangerous.”  

Other mines close to Muswellbrook are Mt Arthur and Bengalla. 

References 

[1] Mount Pleasant Optimisation Project, NSW Planning Department   

[2] See for example NSW Annual Air Quality Statement 2018, pp17-18 

The Nature Conservation Council calls for a legislated ban on mining in all drinking water catchments in NSW following the Independent Planning Commission’s decision to reject the Dendrobium coal mine expansion today. 

“The Dendrobium decision is a victory for commonsense and for the many people who have campaigned for years to protect our water supplies,” Nature Conservation Council Chief Executive Chris Gambian said.  

“It should signal the beginning of the end of coal mining in Sydney’s precious drinking water catchment but the threat remains. 

“That’s why the NSW Government should legislate a ban on mining in all drinking water catchments in NSW to ensure coal mines can never again threaten the security of our drinking water supplies. 

“Coal mining drains billions of litres of water out of the metropolitan catchment every year, enough to supply thousands of homes in Sydney and the Illawarra. 

“Such waste is inexcusable at a time when coal mining is also worsening heatwaves and bushfires though climate change. To have approved this mine expansion would have been a grave mistake. 

“Unfortunately, this is not the only threat from coal mining to important water resources and habitat, including the Angus Place expansion near Lithgow and plans to tunnel uner Woronora Reservoir.” 

Mr Gambian said the decision reflected poorly on the NSW Planning Department, which had recommended the expansion be approved despite serious risks to water, rare swamplands and Aboriginal heritage. 

“The Planning Department has time and again put the interests of coal companies ahead of local communities and the environment,” he said.  

“There should be a review of the department’s processes to determine how it could have so enthusiastically endorsed this proposal, which was clearly not in the public interest.” 

The Nature Conservation Council has asked the Environment Protection Authority to consult the public and health professionals before deciding whether to grant Vales Point power station a further five-year exemption from nitrogen oxide pollution limits in the NSW Clean Air Regulation. 

“We have written to the EPA recommending that it reject the application and to let health professionals and the people who live in the shadow of the Vales Point smoke stacks to be heard,” Nature Conservation Council Chief Executive Chris Gambian said.

“The extremely high level of nitrogen dioxide pollution coming out of Vales Point power station is a serious public health issue.

“It is only right that the communities bearing the brunt of the health effects of this facility be given a chance to have a say about how it is regulated. 

“NO2 pollution from coal power stations causes asthma in 650 children on the Central Coast. [1] 

“These children would not have asthma if power stations in NSW, including Vales Point, met emissions standards that apply in other countries.

“Delta Electricity, which owns Vales Point, is massively profitable and could easily afford to install pollution controls that would significantly address the problem.

“Delta is a cabal of capitalists with one objective — to run their coal-fired power station with minimum pollution controls for as long as possible to maximise their profits, regardless of the human health and the environmental impacts.

“The EPA should be standing up for the people, not allowing big polluters harm the health of children on the Central Coast."    

Delta Electricity applied for the exemption from NO2 emissions standards in December. The EPA has 60 days to make its decision (February 21), or 90 days if it gives the public and health professionals a say (March 23).

References 

[1] Ewald, B, (January 2021), Power station NO2 emissions and paediatric asthma in Central Coast, Hunter Valley and Sydney Local Government Areas

MEDIA CONTACT: James Tremain | 0419 272 254

Vales Point power station, one of the state’s biggest polluters, must not be granted another five-year exemption from the Clean Air Regulation, according to the Nature Conservation Council.

“Vales Point is a massively polluting business that makes mega profits for its billionaire owner because the NSW Government and the EPA keeps letting it off the hook,” Nature Conservation Council Acting CEO Jacqui Mumford said.

“This power station is not only fueling climate change, it is harming the health of hundreds of kids on the Central Coast. 

“Vales Point emits nitrogen dioxide (NO2) pollution at twice the rate of other coal power stations because it hasn’t invested in even the most basic equipment that can reduce this pollution.

“The free ride has to end.”

The owner of Vales Point,  Delta Electricity, applied to the EPA for another five year exemption from the state’s clean air laws on December 23. The EPA is now considering the application.

Vales Point’s current Environmental Protection Licence allows up to 1500 milligrams of nitrogen dioxide to be emitted per cubic metre of exhaust, while under the NSW Clean Air Regulation, polluting facilities of the same age must emit around half as much pollution, at 800 milligrams per cubic metre. [1]

Nitrogen dioxide from coal power stations causes respiratory diseases and is responsible for hundreds of kids in the local area developing asthma.

“Coal power stations should not be above the law when it comes to polluting our air,” Ms Mumford said. 

“It’s time Vales and all power stations in NSW stopped poisoning the air we breathe and protected the health of people who live around Lake Macquarie and the Central Coast.

“For 10 years, the Vales Point coal power station has been exempted from the Clean Air Regulation. Enough is enough. We call on the EPA to reject this latest application.

“Installing low-NOx burners would halve the nitrogen dioxide pollution that the plant releases into the community, at a cost which is just a fraction of its annual profit.

“The EPA has not yet committed to holding public consultations on this application, so if locals want to see cleaner air in their community, we encourage them to get in touch with the EPA to ask them to reject  this application.”

BACKGROUND 

• The Federal Government has earmarked a $8.7 million subsidy for repairs to Vales Point power station, which is owned by coal baron Trevor St Baker. 
• The power station is expected to close by 2029, but its owner has stated that it would run the plant as long as possible. ASIC filings show that last year the power station made a before tax profit of $141 million. [2]
• An engineering report commissioned by the power station found that fitting low-NOx burners to reduce nitrogen dioxide emissions would cost about $33 million. [3]
• Mr St Baker has a record of gaining from government decisions. He bought Vales Point power station from the NSW Government for $1 million in 2015 and made $113 million in profit on the deal in 2017-18. [4]  
• Mr St Baker is a regular political donor, and former National Party candidate. 

REFERENCES

[1] Schedule 3, p83, Protection of the Environment (Clean Air) Regulation 2002

[2]  Vales Point power station’s billionaire beggars receive $62 million dividend,  1-12-20, NCC Media release

[3] Jacobs report, GIPA EPA431, table ES-2, page 10

 [4] The man who bought Vales Point power station from the NSW Government for a song has new plans for the site, 23-1-19, Newcastle Herald 

Energy giant AGL has paid a record amount in rehabilitation costs, legal fees and community payments after a pipeline at its Bayswater power station burst and released 1,440 cubic metres of hazardous coal ash into Bayswater Creek on September 4, 2019. 

Clean-up and rehabilitation costs carried out by AGL came to $320,000 and the Enforceable Undertaking agreed to by AGL amounts to $1.108 million, one of the biggest in NSW history.

The failure of the pipeline that transported the coal ash released enough sludge to half-fill an Olympic-sized swimming pool.

Coal-ash flowed into the creek for eight hours before it was detected because two monitors were not working. One was broken and the other was turned off.

AGL had been aware of potential integrity issues in the high-pressure coal-ash pipeline since 2014, five years before the pipe burst.

The EPA considered that the incident resulted in water pollution and other breaches of environmental legislation. 

Environment groups believe the response isn’t tough enough and have called for changes to ensure similar environmental breaches can never occur again. 

They’re also calling for an overhaul of coal-ash waste management, which is currently the subject of a NSW parliamentary inquiry.

Lawyers from Environmental Justice Australia uncovered the documents on the NSW Parliamentary Inquiry website, however the ‘enforceable undertaking’ isn’t currently available on the NSW EPA’s public register.

Environmental Justice Australia lawyer Jocelyn McGarity said: “Based on AGL’s poor history complying with its licence conditions, it is understandable that community groups feel a tougher response is warranted. 

“This is the second enforceable undertaking between the EPA and AGL this year. It comes after 52 licence non-compliances and numerous fines totalling over $100,000 in the past five years.

“AGL has failed to meet its legal obligations and has endangered the environment, yet has again avoided criminal prosecution.”

Hunter Community Environment Centre is calling for a $20 levy on every tonne of coal ash dumped in dams to incentivise power companies to find more environmentally acceptable ways of disposing of their waste. For example, coal ash can be reused in the manufacture of building products including lightweight aggregates.

HCEC spokesperson Jo Lynch said: “The practice of storing hazardous coal-ash waste on site at coal-fired power stations is a recipe for disaster.

“A coal-ash levy would enable waste that poses a high environmental risk on site to be transformed into high-quality recycled products ready for market.

“It's essential that the NSW Government support power companies to find safe uses for their waste to ensure incidents like these are avoided.”.”

Nature Conservation Council Chief Executive Chris Gambian said: “Coal-fired power is not just bad for our climate and the air our children breathe, it poisons our waterways and soils.

"These coal-fired power stations are getting very old so the risks to workers and the local environment are increasing. The sooner NSW phases out these old coal power stations the better for everyone."

BACKGROUND 

AGL Bayswater Creek Coal Ash Incident

Context

• AGL had known about integrity issues in the high pressure coal ash pipeline since 2014 (enforceable undertaking point 1.12) and in 2017 prepared a report to the EPA outlining options to contain potential spills.
• On 4 September 2019, the pipe carrying fly-ash waste from AGL’s Bayswater coal power generator in the Hunter Valley ruptured causing 1,440 m3 of coal ash slurry to be released. Some of this went into the Bayswater Creek (which was dry at the time).
• AGL Macquarie Pty Ltd (AGL) notified the incident to the EPA.
• AGL cleaned-up the waste.
• The EPA has entered into an enforceable undertaking (EU) with AGL over the incident that will see AGL pay $600,000 to minimise the risk of a future hole in the pipeline occurring, $500,000 towards environmental restoration projects, and $8000 in training for staff for a total of $1.108 million.
• An Enforceable Undertaking is a voluntary agreement between the EPA and an entity that admits wrongdoing and may involve commitments to clean up or rectify an incident.
• AGL entered an EU with the EPA over using the wrong sampling methodology for coal ash relating to Bayswater and Liddell early this year. The total EU was $100,000. AGL also had an EU in 2013 for one of its gas projects.
• According to the EPA register, none of the other current owners of NSW power stations have had any EUs with the EPA.
• Looking through the media releases of EUs in the EPA website, this appears to be more than double the previous largest EU the EPA has entered into since 2012.
• The information re the EU was made publicly available as part of the NSW Parliamentary Inquiry into the ‘Costs for remediation of sites containing coal ash repositories’ based on AGL’s response to questions on notice.

Non-compliances at Bayswater

Since 1 February 2015 Bayswater has recorded 52 non-compliances (including the latest incident), detailed in its Annual Returns.

This includes one non-compliance with licence conditions in 2017, and environmental legislation prohibiting water pollution, arising from a leak in the Ravensworth A Ash Line that caused ash slurry to be discharged from the pipe to land and waters. The Ravensworth Ash Line also failed in 2016 resulting in ash slurry discharge.

Since August 2015, AGL has been issued with 7 penalty notices relating to Bayswater, totalling $105,000.

This latest incident has resulted in the largest Enforceable Undertaking entered into by the EPA since at least 2012 in NSW. (Suggest the journalist asks the EPA if this is the biggest EU they have entered into with a coal-fired power station).

The EPA has only prosecuted AGL (in that case, AGL Upstream Investments Pty Ltd) on one prior occasion in 2018. That was in relation to alleged licence non-compliances relating to coal seam gas wells at its Camden Gas Plant. (What happened in this case? There is no final judgment, suggesting the EPA discontinued the matter).

LINKS: 

AGL Enforcement Undertaking 31 August 2020: https://apps.epa.nsw.gov.au/prpoeoapp/ViewNotice.aspx?ID=1600001

Images and video footage of Bayswater Coal Power Station including Coal Ash Dam: https://drive.google.com/drive/folders/1KbkMlsvR21ycgF3jTxO8MGI7Ie6mIjix 

The Federal Government must withdraw its $8.7 million grant to Vales Point power station after revelations that owners Trevor St Baker and Brian Flannery took $62 million in dividends in FY2019-20.

Details of the superprofit are contained in Financial Statements and Reports posted with the Australian Securities & Investments Commission for Delta Electricity and subsidiary Sunset Power International. 

"Other coal power station owners have refurbished their turbines with their own money — only Trevor St Baker's company is seeking government handouts to refurbish its coal-fired power station,” Nature Conservation Council Campaigns Director Brad Smith said.

"Voters must be wondering why Angus Taylor is providing taxpayer handouts to wealthy coal barons like these.

"It's outrageous that Sunset Power International made a $141 million profit while seeking a taxpayer handout of $8.7 million to maintain their aging power station.

“This deal is not only bad for taxpayers, it is bad for the climate. 

“Every three months the turbine refurbishment adds to the life of the power station will cause one million additional tonnes of climate pollution.

"It's clear that this is a terrible waste of taxpayers’ money and Angus Taylor must not award this grant."

The financial statement reports the value of the Vales Point, which Mr St Baker bought from the NSW Government for a bargain $1 million, was written down by $113 million due to increased competition from solar and wind generation.

Mr St Baker last week reportedly threatened to sue the NSW Government for damages if it implemented its clean energy package. 

The package aims to increase renewable generation in NSW by 12 GW by 2030..

"It's now clear that Trevor St Baker's attempt to scupper the NSW Electricity Infrastructure Investment Roadmap was based on self-interest and against the interests of NSW consumers,” Nature Conservation Council Campaigns Director Brad Smith said.

Mr St Baker has made $198,050 in political donations over the past three years.

AUSTRALIAN FINANCIAL REVIEW

Power barons pocket $62m, slash Vales Point value

Elouise Fowler

Dec 1, 2020 – 12.01am

Power barons Trevor St Baker and Brian Flannery have slashed the value of the Vales Point power station by almost half despite posting a profit and pocketing a $62 million dividend from the NSW coal plant they bought for $1 million from the state government

Mr St Baker has also agreed to buy out Mr Flannery's 50 per cent share of the NSW coal power station near Lake Macquarie – which supplies about 4 per cent of power for the national grid.

The company – in which the duo are the only shareholders – slashed the value of the plant by 45 per cent to $221.7 million, down from $408.8 million last year, documents lodged by Sunset Power International with the corporate regulator showed.

The hefty write-down comes just five years after the duo paid the NSW government only $1 million for the facility on the state’s Central Coast in 2015.

The Sunset Power group blamed the pandemic-induced cut in demand for electricity and competition.

"Electricity prices and Vales Point production remained high in the first half of the financial year," Sunset Power said in its financial report.

"But reduced demand for electricity in the National Electricity Market as a result of the COVID-19 pandemic, combined with an increase in the supply of renewable electricity, has resulted in lower electricity prices and reduced production at Vales Point Power station.

"As a result of realised value during the financial year and the lower forward electricity market price curve for electricity, the fair value of Vales Point Power station has been lowered."

This comes as Mr St Baker criticised the landmark NSW renewable energy road map, which passed Parliament last Friday and aims to attract $32 billion of private investment in NSW infrastructure to build 12GW of renewable energy and 2GW of storage.

Cross-party support

The road map – backed by the Australian Energy Market Operator – drew the ire of the federal government and industry but won cross-party support in Parliament despite 30 hours of obstructions by One Nation's Mark Latham, who referenced Mr St Baker's criticism that it would devalue coal-fired power plants.

The Vales Point power station near Lake Macquarie is a bit more than half the size of the Loy Yang A brown coal-fired plant, Australia's largest, in Victoria's La Trobe Valley and about the same as the Yallourn Power Station.

The 1320-megawatt plant – the backdrop for the film clip of the Midnight Oil hit US Forces – posted a 28 per cent net profit increase to $134.7 million from $535.1 million revenue. In the previous year it earned $96 million profit from $598.9 million revenue.

An annual dividend of $62 million was paid, compared with $30 million in the previous year.

Sunset Power’s balance sheet is carrying $331 million in net ­assets, including $55 million in cash.

The Vales Point coal-fired power generator is controversially earmarked for $8.7 million funding in the federal budget to upgrade the power station.

Taxpayer funds

Nature Conservation Council Campaigns director Dr Brad Smith called for the federal government to abandon the grant, saying the company should not pocket taxpayer funds when it has posted a profit.

"It's outrageous that Delta electricity made a $141 million profit while seeking a handout from taxpayers of $8.7 million to maintain their ageing power station," Mr Smith said.

"Other coal power station owners have refurbished their turbines from their balance sheets. Only Trevor St Baker's company is seeking government handouts to refurbish its coal-fired power station.

"Every three months that the turbine refurbishment adds to the life of the power station will cause 1 million additional tonnes of climate pollution."

https://www.afr.com/companies/energy/power-barons-pocket-62m-slash-vales-point-value-20201130-p56j6o

The Nature Conservation Council welcomes the passage of the Electricity Infrastructure Investment Bill through NSW Parliament this afternoon with cross-party support after a marathon 32-hour sitting of the upper house.

The bill will ensure about 60 wind and solar farms are built over the next 10 years, creating 9,000 jobs and stimulating $32 billion in private investment. These projects will prevent the emission of 90 million tonnes of climate pollution.

“The passage of this bill shows that all sides of politics agree we must get on with building the clean-energy future our state needs,” NCC Chief Executive Chris Gambian said.

“This law is proof that NSW can act on climate change at the same time as creating jobs and reducing power bills.”

The NSW Electricity Infrastructure Investment Bill will accelerate the construction of transmission lines to regional NSW and support the development of new solar, wind and pumped-hydro projects.

“Everyone in NSW has skin in this game,” Mr Gambian said. “Last bushfire season showed we are now on the front line of climate change impacts, and scientists have warned that if we don’t immediately cut climate pollution, fire seasons will get much worse.

“This law will see about 60 new solar and wind farms constructed across the state, more than quadrupling clean-energy generation.”

The Liberal Party, ALP, the Nationals, the Greens, Christian Democrats, Animal Justice Party and independent MPs supported the bill. Only Pauline Hanson’s One Nation and the Shooters, Fishers and Farmers  Party opposed.

“Global heating is a massive global crisis,” Mr Gambian said. “This plan demonstrates that we can find pathways through this crisis that help modernise and strengthen our economy.”

The Nature Conservation Council welcomes today’s NSW Government Electricity Infrastructure Roadmap as a crucial step towards making NSW a low-carbon economy.

 “This plan is a step-change in ambition on clean energy,” said NCC Chief Executive Chris Gambian..

“It represents serious action on climate change in a way that will also create jobs and bring down power prices.

The NSW Electricity Infrastructure Roadmap announced today will accelerate the construction of transmission lines to regional NSW and support the development of new solar, wind and pumped-hydro projects. 

It will ensure about 60 wind and solar farms are built over the next 10 years, create 9,000 jobs,  stimulatE $32 billion in private investment, and prevent the emission of 90 million tonnes.

“Everyone in NSW has skin in this game,” Mr Gambian said. “Last bushfire season proved yet again we are on the front line of climate change impacts and scientists have warned that if we don’t immediately cut climate pollution fire seasons will get much worse.

“The plan will see about 60 new solar and wind farms start generating across the state, more than quadrupling clean energy generation.

“Global heating is a massive global crisis. This plan demonstrates that we can find pathways through this crisis that help modernise and strengthen our economy.

“While the Morrison government is absent on climate action, thank goodness their Coalition colleagues in NSW are willing to step up to the challenge of cutting climate pollution while growing the economy.”