THE company that bought the old Vales Point power station from the NSW government for $1 million now values its purchase at $730 million, and is making plenty of money along the way.
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As the ABC reported on Tuesday, Sunset Power – which is trading Vales Point under its old Delta Electricity name – is controlled by companies associated with coal industry legend Brian Flannery, and an electricity industry veteran Trevor St Baker.
Mr St Baker also has an interest in the stock-exchange listed ERM Power, which signed an offtake agreement with Sunset Power soon after it bought Vales Point in November 2015. The agreement was reported to the stock exchange as a “related party . . . arms length” deal at the time.
The government had brought forward Vales Point’s planned closure date to 2021 but the ABC has reported that Sunset Power intends running the plant to its former closure date of 2029, if not longer.
Back in 2015, the government had struggled to find a buyer for the station, and then treasurer Gladys Berejiklian said the $1 million purchase price was above its “retention value”.
The sale saved taxpayers from “ongoing losses”, as well as the costs of decommissioning the plant, estimated in the tens of millions of dollars.
Ms Berejiklian said the former Labor government's “dud Gentrader deal” had left Vales Point as a “stranded asset” on the state's balance sheet. But in the time since Sunset Power bought Vales Point, the electricity wholesale market has tightened considerably, with the closure of Victoria’s Hazelwood power station, and the likely closure of Liddell. Higher gas prices have also made coal power more competitive in the National Electricity Market.
Vales Point’s owners earned a reported $380 million in the past year from electricity sales, up from $270 million the year before.
At ERM’s annual general meeting in Brisbane on Monday, the company told investors it was making a retail margin of $4.11 a megawatt hour on its retail electricity, up from a predicted $3.70. Some of that power would have been sourced from Vales Point.
Sunset Power produced its latest set of accounts last week, valuing Vales Point at $730 million.
The Newcastle Herald has been seeking comment from Sunset Power.
