AGL, Victorian gov’t ink structured transition deal for Loy Yang power station
The power plant is scheduled for closer on 30 June 2035.
AGL Energy Limited signed a Structured Transition Agreement (STA) with the Victorian Government for the operation, maintenance and retirement of the Loy Yang A Power Station and its associated mine.
In a statement, AGL said the deal mandates the collaboration of the company and the state for the orderly closure of the power plant scheduled closure on 30 June 2035.
The STA was signed to provide the company, the state, the energy market, employees, and consumers “with a higher level of certainty” of the plant’s operations and upcoming closure.
This will not change AGLs existing remediation provisions and impairment charges related to the company and the mine, as well as its rehabilitation obligations.
AGL said the framework sets out the reliable and secured supply of electricity in Victory by ensuring the continued operation of the plant at a certain agreed operation and performance availability levels until the closure date.
It also clarified avoiding unplanned closure of the plant before the scheduled closure date through a risk-sharing mechanism that will apply in case of adverse market conditions before the scheduled closure.
The deal also provided clarity on the timely rehabilitation of the plant and the mine, the investment in replacement generation capacity by providing certainty on the retirement of legacy generation, and economic and workforce transition arrangements to support the Latrobe Valley region.
The company added that the agreement allows for scenarios that can close earlier than 30 June 2035 if the power station is not needed for the secure electricity supply in Victoria.
AGL added that the deal mandates the company to continue to operate the plant with the certain agreed operation and performance availability levels and support the plant and mine workers' transition, including the establishment of a Community and Economic Development Fund funded by the company composed of $20m for community benefit activities and $30m for repurpose activities.