AGL remains steadfast after months of demands from federal Coalition MPs – but not their counterparts in the NSW government – that the company either extend the life of the half-century-old plant beyond its scheduled 2022 closure or put the assets on the market for others to buy. 'Bleeding edge' Mr Vesey conceded AGL’s shift away from fossil fuels had drawn political fire but argued the strategy was the right thing to do for shareholders and for environmental reasons. ‘‘Somebody has to be on the bleeding edge,’’ he said. ‘‘We [AGL] are going to be the biggest emitter of [carbon dioxide in Australia] – that means we are going to need to be responsible, and take action.’’ Loading

AGL plans to replace Liddell with gas, batteries and pumped hydro and renewable energy after 2022. Any sale of Liddell would be complicated by the shared cooling, coal supply and other services with the nearby, larger Bayswater plant. “We need to renew the infrastructure in this country," Mr Vesey said. "We need to replace older, less reliable stations." “That’s the way the world’s going, and we believe it’s time to move forward.” Loading Replay Replay video Play video Play video 'Unacceptable'

Pressure to sell Liddell has not abated, with Environment and Energy Minister Josh Frydenberg telling Fairfax on Thursday that AGL’s plans were ‘‘unacceptable’’. Mr Frydenberg argued that the closure of Liddell in 2022 would run the risk of power cuts, and repeated that the government’s ‘‘preferred option’’ was the sale of the plant to a third party. “Liddell provides energy for more than one million homes across NSW and supports some of the large industrial energy users like the Tomago Aluminium smelter,’’ Mr Frydenberg said. ‘‘The Australian Energy Market Operator – who’s got no political axe to grind in this battle over energy policy – has said that there will be a shortfall and that this [closure in 2022] would hasten the likelihood of blackouts across the state.” AEMO also said the shortfall could be made up if energy companies built up alternative capacity in the next four years.

'Fundamental axiom' AGL's plans to replace Liddell's capacity itself would firm up over time because it made sense to shareholders and customers to avoid locking in too early technology that is developing fast. “There’s a fundamental axiom in business: you make the decision at the last possible moment," Mr Vesey said. "Why? You get smarter every day.” Mr Vesey said that any company was free to submit a proposal to buy Liddell and that AGL had an obligation to review serious offers. But he added that so far there had only been ‘‘a lot of talk around it’’. AGL bought Liddell and Bayswater from the NSW government in 2014 for $1.5 billion. Then rated at 2000 megawatts, AGL has since lowered Liddell’s estimated capacity to about 1680 megawatts, although maintenance issues saw the plant run at an average of about 950 megwatts during the recent summer.

Liddell Power Station in the Hunter Valley. Credit:Janie Barrett 'World has changed' While AGL had initially valued Liddell at zero dollars, this was no longer the case because market prices had since risen, particularly after the relatively abrupt closure of the similar-sized Hazelwood power station in Victoria. “The value of the plant has changed from the time we bought it because the world has changed,’’ Mr Vesey said. Apart from Hazelwood, the shift of gas from generation to export markets, a repricing of black coal and rising network costs – all beyond AGL’s control – had acted to push those prices higher.

If Alinta or ‘‘someone was so inclined’’ and could “meet our expectations about its value today and the value we have forward, then they need to put forward a bona fide bid but that hasn’t happened yet’’, he said. Loading Mr Vesey said governments would always respond to public concerns, such as rising prices of an essential service. While there would always be an urge for governments to act quickly to fix such issues, he argued there should also be a recognition that markets and technologies needed time to adjust. ‘‘Markets should deliver outcomes that are in line with the needs of citizens – and in First World liberal democracies, they should align,’’ Mr Vesey said.

‘‘When they don’t align, that’s what we call sovereign risk. The challenge is knowing you have a problem today but getting it right for decades. It’s a tough problem.” Competition view Rod Sims, head of the Australian Competition and Consumer Commission, said the competition watchdog had argued against the two plants being sold together because of the market concentration and possible impact on prices. Market movements since ‘‘have shown we were right’’, Mr Sims said yesterday. ‘‘It would certainly be pro-consumer if AGL got rid of Liddell’’ to another buyer ‘‘other than the big three’’, he said.

AGL, Energy Australia and Origin Energy dominate electricity generation and retailing in the eastern states. Still, Mr Sims stressed the ACCC was ‘‘not going after AGL’’, and the company would not be breaching the Competition Act if it refused to sell Liddell.