Meeting between the prime minister and AGL boss also results in agreement to take issue of sale or extension of generator to the energy company’s board

This article is more than 3 years old

This article is more than 3 years old

AGL will give the Turnbull government a plan within 90 days detailing how it will supply the electricity market with reliable power when the ageing Liddell coal plant retires in 2022.



The public commitment came after a meeting between the AGL chief executive Andy Vesey, the prime minister, and senior government ministers, in Canberra on Monday, where the company was asked to take a proposal to the board to either sell the plant, or keep it open for another five years.

In a statement issued after the meeting, the company made it clear it had agreed to the government’s request to take a sale or extension proposal to the board very reluctantly.

“I was asked to take to the AGL board the government’s request to continue the operation of Liddell post 2022 for five years and/or sell Liddell, which I agreed to do,” Vesey said in a statement.

Andy Vesey (@AndyVesey_AGL) Plan to be delivered in 90 days of actions we'll take to avoid market shortfall once Liddell retires in 2022 https://t.co/SSljdWaM01

While acknowledging it would manage a proposal to sell or extend Liddell’s operating life up to the board – the company also made it clear it was inclined to stick with a previously telegraphed plan to develop gas peaking plant, pumped hydro and batteries, as well as a demand response, to deal with the shortfall in NSW once the plant closes.

Vesey said the company did not see new development of coal as “economically rational, even before factoring in a carbon cost”.

In a pointed observation, AGL said it was complying with the government’s Finkel review requirements to give advanced notice when it intended to close power plants.

“AGL is meeting one of the 49 recommendations in the Finkel report that have been accepted by the Commonwealth government,” Vesey said.

“The long notice period we have given reflects our commitment to managing carbon risk for shareholders and avoiding the volatility created by recent sudden withdrawal of capacity.”

The energy minister, Josh Frydenberg, hailed the meeting a success, and he told reporters the company had not made any request for government assistance in the development of alternatives, like gas and renewables, to replace Liddell’s capacity.

Frydenberg said AGL’s alternative plan for power to replace the electricity supplied by Liddell “would be firm dispatchable capacity and have no adverse impact on consumers both in terms of price and the reliability of the system.”

The government has indicated there would be buyers for Liddell in the event AGL was prepared to sell, and Delta Electricity, a company headed by the coal barons Trevor St Baker and Brian Flannery, has expressed an early interest.

The meeting with AGL came as the Nationals leader, Barnaby Joyce, acknowledged earlier on Monday that ongoing subsidies for renewable energy were “essential” if the government was to comply with Australia’s international climate commitments.

The National party’s federal conference this past weekend passed a motion calling for subsidies for renewable energy to be phased out within five years, but Joyce said on Monday his party would chart its own path.

Joyce said he would be guided by the federal conference, but not “instructed by it” and he said his view was Australia needed to comply with the commitments we gave in the Paris agreement.

He said the National party would formulate its own position on the clean energy target recommended by the chief scientist in his review of the national electricity market, and then would work out how to come to a common proposition with the Liberal party on the government’s energy policy.



Joyce characterised coalition with the Liberals as “a business arrangement”.

The government has also asked the Australian Energy Regulator to examine the bidding practices of New South Wales power generators, responding to reports that generators have been selling their electricity in manner which inflates spot prices.

In a statement, the energy minister, Josh Frydenberg, said the request to the regulator is an extension of a project already underway examining behaviour by bidders across the national electricity market following the closure of Hazelwood power station earlier this year.

The regulator will report to the energy council of the council of Australian governments in November.