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The Iemma Government’s mismanagement of the State’s coal contracts will cut millions off the sale price of the generators and cause huge long-term increases in the price of electricity for consumers, Shadow Minister for Energy Mike Baird said today.
“Market sources have today confirmed the Iemma Government has short-term expiry profiles for its coal contracts, which means the coal-fired generators will be subject to huge increases in costs when the contracts expire in the next few years,” Mr Baird said.
“Considering the cost of coal has risen by around 125% over the past year* and is continuing to climb, any bidders for the generators will clearly be concerned with the exposure to the long-term coal price,” he said.
“The Treasurer Michael Costa needs to explain why his Government has negotiated such short-term coal contract expiry profiles when profiles of 20 years are available.
“We understand the majority of Centennial Coal’s contracts, which supplies 40% of the coal and gas for the State’s generators, expires by 2013. Centennial Coal has also revealed it is looking at international opportunities and expanding out of the domestic market.
“In other words, not only will the cost of coal be rising when the contracts expire but a big chunk of the supply will be disappearing from one of the State’s major suppliers.
“Consumers should brace themselves for a considerable increase in the price of electricity – this is on top of what they are already expecting as a result of carbon trading.
“Taxpayers should also be prepared for much-reduced proceeds from the power sale. It will be nowhere near the $15 billion first flagged and likely to be less than the Treasurer’s revised figure of $10 billion considering today’s revelations.
“This is one of the reasons why the NSW Liberal/Nationals have insisted an independent review of the power sale by the Auditor-General is essential. We cannot leave it up to the Iemma Government to deliver a fair price for the assets,” he said.
MEDIA: Lisa Harrington – 0406 726 880
* Australian Bureau of Agricultural and Resource Economics http://www.abareconomics.com/interactive/08ac_june/htm/coal.htm
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