ERARING power station has sold to Origin Energy for just $50 million in a controversial deal aimed at cleaning up the state's tangled electricity industry.
In the other half of yesterday's announcement, the state government has put the planned Cobbora coalmine on hold, meaning an end, for the time being, to extra coal trains running through Newcastle to and from the Central Coast.
Eraring's $50 million price tag has been slammed by unions as a bargain basement price for the state's biggest baseload power station.
Electrical Trades Union state secretary Steve Butler said the government negotiated with a single buyer instead of going to tender.
But Greens MP John Kaye said the government had little choice because the former Labor administration's "gen-trader" contracts had "ripped all of the value out of the station itself".
Origin paid a reported $609 million for the rights to Eraring's electricity back in 2010, meaning it has effectively paid $659 million for the 2880-megawatt station.
Treasurer Mike Baird said the O'Farrell government had "unwound the dud deal of the century . . . executed in Labor's dying days in office".
Mr Baird said the government would pay Origin $300 million to terminate its coal supply contract from the Cobbora mine. He said building Cobbora would have cost the state $1.5 billion.
"Overall, at a net cost of around $75 million, taxpayers will avoid liabilities of over $1.75 billion, which were part of Labor's disastrous legacy," Mr Baird said.
He said Cobbora contracts with two government-owned agencies, Macquarie Generation and Delta Electricity, would also be terminated, although there was no mention of termination payments. But Cobbora was "nevertheless a large coal resource" and the government would still sell or lease it.
Lake Macquarie independent MP Greg Piper said the $50 million fire sale was "the latest inevitable chapter in a sorry story of bungled privatisation".
Even if the gen-trader contracts had taken much of the value out of baseload power stations, Eraring still made $137 million profit in the 2011-12 financial year.
"They won't even recoup the cost of the $200 million upgrade to the station only recently completed," Mr Piper said.
He said consumers were already reeling from big power bill increases and private interests should not have a monopoly over the power network from the point of generation to the point of sale.
Mr Baird said Eraring workers moving to Origin would do so on terms consistent with other privatisations.
He said negotiations on Delta West's Mt Piper and Wallerawang power stations were continuing.