"However, following an independent engineering assessment, AGL has determined that the remaining three units will close in April 2023, supporting system reliability throughout the 2022-23 summer months." Loading The decision to extend the life of three of the four Liddell units will come as some relief for Gladys Berejiklian's NSW government, which had been concerned about the political fallout from black-outs during the 2022-23 summer ahead of the March 2023 state election. It is understood that AGL had been considering whether two of the four Liddell units could be extended for even longer. However, engineering challenges, including sourcing spare parts for the fifty-year old equipment, turned out to be too costly to resolve. The company's announcement that its Torrens A gas-fired power plant in South Australia would stay open through this coming summer will also bring relief for both that state and Victoria, where load-shedding is a looming threat.

AGL was also facing pressure over reliability after one of its Loy Yang A units failed in the Latrobe Valley in June, taking almost 600 megawatts of capacity out of the grid. It is understood that the company is expecting that unit to be back in service in early December, ahead of the usual summer peak demand periods. While AGL has previously stuck by the original 2022 timeframe, Federal Energy Minister Angus Taylor had warned the company of an energy shortfall should the plant be decommissioned that soon. Mr Taylor cautiously welcomed the company's announcement on Friday. "The government's position on Liddell is well-known and has not changed. We remain in constructive dialogue with AGL about this, and this is a good short-term announcement," he said. "But there is more to be done. We want to see existing coal and gas generation stay in the market, running at full tilt."

NSW Energy and Environment Minister Matt Kean said he was "pleased to see AGL doing the right thing by the people of NSW by delaying the closure" of the plant. Mr Kean said he was focused on long-term solutions to introduce new electricity supply into the market and called on companies to "deliver more dispatchable generation that drives down prices and ensures reliability into the future". Energy prices leave aluminium smelters 'on thin ice' Rio Tinto chief executive Jean-Sebastien Jacques warned on Thursday that the company's aluminium smelters in Gladstone and Newcastle were "on thin ice" because of high energy prices. He said the smelters, which require a large amount of energy, faced a "very, very challenging situation" and the company was "in discussions with the federal government and the state government and our utility providers" to find solutions.

Mr Taylor said the government was in ongoing discussions with energy intensive industries about bringing down prices and ensuring reliability. "We are always exploring new ways to do this," he said. "We consider Rio's aluminium smelters to be crucial businesses and employers in NSW, Queensland and Tasmania. This highlights the importance of maintaining competitive baseload coal and gas generators in the market, and attracting new low-cost baseload generation over time." A new "Retailer Reliability Obligation" came into effect on July 1, compelling energy providers to meet demand for "despatchable, 24/7 power" and outlining penalties for any breaches. AGL is continuing to work on a $1.36 billion plan to replace the power supply lost with the Liddell closure.