Australia extends talks on coal power plant closures

CANBERRA, June 29 Fri Jun 29, 2012 4:27am EDT

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CANBERRA, June 29 (Reuters) - The Australian government will extend talks on a multi-billion dollar plan to shut down some of the nation's dirtiest coal-fired power stations after missing a deadline to do a deal, Resources Minister Martin Ferguson said on Friday.

The government announced the so-called contract for closure deal as part a sweeping plan to introduce carbon pricing and promote green energy investment to curb the nation's growing greenhouse gas pollution. Negotiations started last October.

"There are a number of complex commercial issues yet to be resolved including the need to ensure value for money," Ferguson said in a statement.

Five power stations are targets for closure and the companies involved in negotiations are Alinta Energy, HRL, Hazelwood Power Partnership, RATCH-Australia and TRUenergy.

International Power GDF Suez Australia owns the majority of the 1,740 megawatt brown-coal fired Hazelwood power station in southern Victoria state, among the oldest and most carbon-polluting power station in the country.

TRUenergy, a unit of CLP Holdings, owns the 1,480 MW Yallourn power station in Victoria.

The government wants agreement on a time-table to phase out the power stations finally chosen for closure. Several also have significant debt levels, another factor in the negotiations along with replacement costs.

The government was hoping to announce a deal on June 30, a day before a national carbon pricing programme starting with a A$23 ($23.06) a tonne carbon tax starts. Carbon pricing forecasts are another factor in negotiations because all five power stations emit more than 1.2 tonnes of carbon dioxide equivalent per megawatt-hour - meaning high carbon costs.

The government has said its preferred closure timeframe is from July 1, 2016, to June 30, 2020, but would consider proposals for earlier shut-downs.

The Australian Financial Review newspaper has reported the expected lower carbon prices from 2015 have improved the value of Australia's brown coal generators, which are demanding higher prices than the government expected for the closure.

Australia accounts for just 1.5 percent of global emissions but is the developed world's biggest per-capita carbon emitter, due to a reliance on burning coal to generate about 80 percent of the country's electricity.

($1 = 0.9976 Australian dollars) (Reporting by James Grubel; Editing by David Fogarty and Ed Davies)

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