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Eraring extended, challenges remain 

May 29, 2024

In good news for energy stability and local jobs, the NSW Government and Origin Energy have reached an agreement to extend the operating life of Eraring Power Station until 2027. The coal fired power station, which is the largest in Australia, was slated by Origin to close next year, leaving hundreds of workers unemployed and a shortfall in the state’s power generation.

The intervention by the NSW Government is not an upfront payment, but rather a commitment to cover up to 80% of any losses incurred for the next two years. On the other hand, if the plant operates at a profit the state will share in a portion. This arrangement helps ensure that there is an orderly exit from coal-fired power generation in NSW.

On the ground, Eraring’s skilled workforce have been counting down to the 2025 closure date, with talk swirling around for some time about potential extensions. This timeline provides them with certainty, and an opportunity to plan their lives while still remaining employed beyond August of next year. For Eraring power station operators like Scott, the extension comes as a relief:

“We are still facing closure, but we have three years now instead of one. It’s a welcome reprieve that gives us more time to plan what comes next and see where the jobs of the future could be.”

The extension also means it will be more likely that the Net Zero Economy Authority will be up and running, and able to support displaced Eraring workers into new jobs at the time of the plants closure. The Net Zero Economy Authority, which is currently being debated in federal parliament, will be a statutory body dedicated to supporting power station workers affected by the phasing out of coal in domestic energy production. 

This Authority is vital to maintain economic prosperity in power producing regions. 

The Net Zero Economy Authority will support these regions by co-ordinating investment to drive economic diversification. The legislation imposes obligations on closing employers to provide certainty and support for employees during the closure process. It also establishes an Energy Industry Worker Redeployment Advisory Group to identify and incentivise appropriate local regional employers to provide opportunities to workers affected by power station closures.

However, there are still some significant barriers to the continued economic stability of the Lake Macquarie region, where Eraring is located. While the power station itself has secured its future through to 2027, the mines that feed Eraring still hang in limbo. 

Myuna and Mandalong coal mines, both owned by Centennial Coal, have been supplying Eraring with thermal coal for the entirety of their lifetimes. Approximately half of Mandalong’s production goes to Eraring, while Myuna operates as a fully captured coal mine, with no other opportunity to transport coal to other markets. 

As it stands, Centennial Coal has no ongoing contract to supply Eraring power station, meaning there is an imminent risk of all 350 workers at Myuna and more than half of the 600 workers at Mandalong being stood down.

Despite skyrocketing profits over the past 12 months, Origin Energy has been resisting attempts by Centennial to negotiate a new contract under viable conditions, partly due to stockpiling coal purchased elsewhere under price cap legislation. 

Now that Origin has government backing for Eraring to continue operating, it is time for them to step up. Origin should support the community that has hosted Eraring Power Station for over four decades by committing to purchase coal from the local mines that exist to supply the power station.

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