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AEMO suspends national electricity market

A potential deal handing the NSW government control of Origin Energy’s Eraring power station would have exposed the state and taxpayers to an unacceptable level of risk and potential uncapped costs, NSW Treasurer Matt Kean says.

Speaking after a keynote speech at The Australian Financial Review ESG Summit, Kean said he was comfortable that six months of talks with the energy giant held over the second half of last year ultimately did not reach an agreement.

The deal “would have exposed taxpayers to huge uncapped risk” and potentially exposed the government to costs spiralling into the “hundreds of millions of dollars”, Kean said.

“We will always enter into good faith negotiations … but the thing guiding policy decisions in NSW is what’s going to ensure system reliability, what’s going to drive down household energy bills and what’s going to protect taxpayer dollars.”

Kean said the government had ultimately decided that proceeding with the construction of a massive network battery – known as the Waratah Super Battery – holding 700MW was the most effective way to support the state’s energy needs, and that the Australian Energy Market Operator had confirmed the plan.

“I’m very happy with where we landed,” Kean said.

The comments come the day after The Australian Financial Review revealed that Origin Energy approached the NSW government in mid-2021 with a bold proposal offering to hand it control of the loss-making plant from 2023 and financial responsibility from 2025 onwards.

The energy provider reasoned that joint ownership would give the state greater certainty and control over the timing of the plant’s retirement, while also insuring against the timing risks for Snowy 2.0 and the construction of transmission infrastructure linking Snowy to the grid. The talks fell apart in December 2021.

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