Former employees of an embattled Victorian power station are widely expected to receive a six-figure redundancy payment.
Hazelwood Power Station in the Latrobe Valley will close in March 2017, leaving up to 750 people without work. However, station owner ENGIE in Australia will give a generous payout averaging a reported $330,000 per person.
The 1600 megawatt power station had operated in a difficult national energy market environment for an extended period of time.
“Hazelwood is now more than 50 years old. It has been a wonderful contributor to the National Electricity Market but we have now reached the point where it is no longer economic to operate,” ENGIE chief executive Alex Keisser says.
“ENGIE in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation. Given current and forecast market conditions, that level of investment cannot be justified.
“Over the past few years a range of options have been investigated for the business, including revamping existing infrastructure, re-powering with gas fired gas turbines or biomass or reducing the number of operating units.
“None of these options has proven to be economically viable and as a result, the extremely difficult decision has now been taken to close all eight generating units by 31 March .”
Hazelwood employs 450 direct employees plus 300 contractors. Post closure, up to 250 people will be required between 2017 and 2023 to manage the mine and power station site rehabilitation. This will include up to 130 direct employees and up to 130 subcontractor employees in the 2017/2018 period.
ENGIE promises to “fully support” employees as it prepares for the closure of the Hazelwood business.
“I understand this is a very difficult time for our people who have worked so hard over the years to produce up to 25 per cent of Victoria’s electricity needs. All Hazelwood employees, past and present, are to be congratulated on their contribution to the production of the competitive, reliable electricity which has underpinned the Victorian economy for more than 50 years,” Keisser says.
“We also appreciate that this decision will have a significant impact on the Morwell and broader Latrobe Valley communities and we will work with regulators, unions and the local community to ensure an orderly closure, including rehabilitation of the mine and remediation of the power station site.”
Meanwhile, ENGIE will appoint a financial adviser for the possible sale of Loy Yang B Coal Power Station in the Latrobe Valley and the Kwinana Co-generation Facility in Western Australia.
“As the newest and most efficient brown coal fired-power station in the Latrobe Valley, Loy Yang B will be attractive to potential investors. Similarly, Kwinana holds a unique position in the WA energy market that may attract interest from both local and overseas investors,” Keisser says.
“However, it is important to stress that we would only consider a sale of these valuable assets if they met our shareholders’ requirements. If a sale process were to proceed, it would be expected to be completed by late 2017.”