Australia’s largest energy company has become embroiled in a bitter dispute with the government over the closure of a coal-fired power station, prompting the threat of increased state intervention in electricity markets.
Malcolm Turnbull, Australia’s prime minister, on Tuesday accused AGL Energy of putting shareholder profits above customers’ interests by resisting Canberra’s request to keep the Liddell plant open beyond 2022 to boost energy security and avert any blackouts.
“AGL’s management want to look after their shareholders. For them, scarcity of energy is good, because it enables them to raise prices. It’s not good for the Australian people,” said Mr Turnbull. “My job is to look after the people with more affordable and reliable power.”
Mr Turnbull’s comments came a day after a meeting with Andy Vesey, AGL’s chief executive, during which AGL said it would consider a government request to either sell or continue the operation of Liddell for five years beyond 2022. But Mr Vesey said AGL’s preference was to find the best market solution, which it could deliver without extending the life of the plant.
Government MP Craig Kelly said AGL was speaking with a “forked tongue”, while the opposition Labor party accused the Liberal-National coalition of “bullying” the AGL chief executive.
AGL declined to comment on Mr Turnbull’s comments on Tuesday.
The rift between AGL and Canberra comes amid growing concern in corporate boardrooms about the Liberal-National coalition’s meddling in markets.
In April Canberra announced export restrictions on liquefied natural gas producers to tackle rising domestic gas prices and boost energy security. A month later it introduced a federal bank tax to address Australia’s budget deficit.
potential shortfall of power after 2022 if Liddell plant is closed, according to Australia’s energy regulator
The Australian Bankers’ Association has slammed the levy, aimed at raising A$6.2bn over four years, as “bad public policy introduced in haste” while oil and gas lobby group Appea, has warned that restricting gas exports raises the risks of doing business in Australia.
“Most people would regard this level of intervention as highly unusual for a conservative government,” said Anna Bligh, chief executive of the Australian Bankers’ Association. “There is no doubt that populism is influencing politicians around the world in ways that it hasn’t done so for years.”
Last year AGL said it planned to shut the Liddell power plant in 2022 as part of a strategy to begin a phased closure of its coal-fired power plants and to embrace renewables. The government wants AGL to remain open or sell it to a rival, fearing that shutting the 2,000-megawatts plant could result in power shortages.
Australia’s energy regulator last week warned of a potential shortfall of 1,000MW of power after 2022 if Liddell is closed and no new generating capacity is added.
AGL says the best way of providing additional capacity is by developing renewables, which could be supported by gas plants running during peak usage periods.
“In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost,” said Mr Vesey.
The government favours coal plants, which it says provide more stable baseload power. It also has considered subsidising the development of new coal mines and power plants, under pressure from MPs representing coal-mining constituencies.