NSW warns on ‘tough’ negotiations on Eraring
Origin Energy stands to increase gross earnings by about $650 million in 2025-26 if its huge Eraring coal power generator remains open, according to Morgan Stanley estimates, in findings that may play into the terms of a deal expected to be struck with the NSW government to extend its life.
The estimate, by Morgan Stanley energy analyst Rob Koh, came as NSW Treasurer Daniel Mookhey warned Origin against “gaming the system” in its negotiations with the state government on an extension of the 2880-megawatt generator past Origin’s targeted closure date of August 2025.
Origin’s Eraring power plant on the NSW Central Coast is the country’s biggest. Nick Moir
“Origin will feel the wrath of the people of New South Wales if they see this as an opportunity to game the system,” Mr Mookhey said. “Origin should expect this government to engage with them in a pretty tough manner.”
Origin acquired Eraring in 2013 for $50 million from the NSW government, which has ruled out buying it back but must now strike a deal with the owner to keep it going to reduce the risk of price spikes and potential blackouts.
Mr Koh’s estimate is a theoretical one that assumes coal prices at the current cap of $125 a tonne, and wholesale prices around current levels for the financial 2026 year. But in reality there is considerable uncertainty on what those prices will actually be then.
The NSW government’s confirmation on Wednesday that the price cap on thermal coal will end on June 30, 2024 – after which royalty rates on coal will be increased – underlines that uncertainty. Top-quality Newcastle thermal coal prices are currently almost double the cap, at about $US160 ($250.50) per tonne.
NSW energy minister Penny Sharpe said on Tuesday the government’s
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