Concerns have escalated over the rehabilitation of AGL’s Loy Yang power station after the company announced a demerger that carves off coal-fired power stations into a separate corporate entity called PrimeCo.
Bronya Lipski, Lawyer at Environmental Justice said:
“Analysis of AGL’s financial statements, along with the uncertainty surrounding this demerger, throws the company’s promise to cover the costs of rehabilitating its coal-fired power station sites into question.
“There were already huge concerns about whether AGL would adequately rehabilitate its Loy Yang power station site before this announcement. Costs allocated for rehabilitation appear to be grossly inadequate and with this demerger there is a risk they will fall through the cracks altogether.
“A review of AGL’s financial statements – which does not specify estimated rehabilitation costs for each site – shows that the company is allocating just $344m for four large sites (Liddell, Bayswater, Loy Yang A and Camden Gas Project assets). This is less than half the $743M Engie has stated it needs to decommission and rehabilitate the Hazelwood power station and adjacent mine, and is unlikely to cover the costs of rehabilitating one power station, let alone four.
“Without adequate funds for rehabilitation, the Latrobe Valley community will be left with legacy contamination and taxpayers with the bill to clean it up. AGL must address the mounting concerns about the rehabilitation of Loy Yang A power station and mine in light of its demerger announcement.”
In its 2014-15 annual report, AGL estimated that the costs associated with the Loy Yang mine rehabilitation at $54.7 million. Expert evidence presented at the 2015-16 Hazelwood Mine Fire Inquiry estimated the cost of rehabilitating the Loy Yang mine at $112 million and between $221 million and $319 million.
In its 2020 annual report, AGL stated it had allocated $45 million for current, and $299 million for non-current, environmental restoration across all four of its Liddell, Bayswater, Loy Yang A and Camden Gas Project assets.
These estimates rely on the cheapest option being open to AGL Loy Yang Pty Ltd which is flooding the mines with water either fully or partially. The feasibility of water availability for mine rehabilitation in Latrobe Valley is in doubt, with the Department of Environment, Land, Water and Planning technical studies demonstrating water resources in Latrobe Valley are unviable at current take amounts let alone if water allocations were increased for the purposes of mine rehabilitation.
AGL Loy Yang Pty Ltd will also be liable for significant costs associated with decommissioning and demolishing the power station site including its coal ash dams. In March 2021 the Victorian Environment Protection Authority (EPA) amended AGL’s licence for Loy Yang A to obligate the company to prepare a rehabilitation plan for its coal ash dam, and to update that plan every five years. Although not currently reflected in its licence, the EPA has indicated that AGL Loy Yang Pty Ltd will be required to remediate existing contaminated groundwater once the ash dam is of no further use.
Media contact: (03) 8341 3110, email@example.com
 2015-16 Hazelwood Mine Fire Inquiry, Volume IV Mine Rehabilitation, p. 105. Available at: https://www.parliament.vic.gov.au/file_uploads/11172_HAZ_MFIReport-2015_16-Volume4_FA_LR_15B0_pQfGZRfC.pdf.
 AECOM rehabilitation liability estimate for the Hazelwood mine, commissioned by the Department of Economic Development, Jobs, Transport and Resources. Viewed in: 2015-16 Hazelwood Mine Fire Inquiry Volume IV p. 105.
 i AGL, Annual Report 2020, p. 23. Available at: https://www.agl.com.au/-/media/aglmedia/documents/about-agl/asx-and-media-releases/2020/2097212_annualreport.pdf?la=en&hash=82E8FF1E819275718B654F3B19C7862F.
 Hale, J., Boon, P., Lloyd, L., Vietz, G. and Jempson, M., Latrobe Valley Regional Water Study – Ecological Effects Assessment, report to the Department of Environment, Land, Water and Planning (2020). Available at: https://www.water.vic.gov.au/__data/assets/pdf_file/0031/497731/LVEEA_Final-for-publication_Nov2020.pdf.