AGL has placed plans for a $30 million upgrade of Bayswater Power Station on public exhibition.
The project will focus on improvements to systems for the management of coal ash, water and salt.
The 2,640 megawatt power station, which was commissioned in 1985, has produced approximately 15,000 gigawatt hours of electricity a year, enough to power approximately two million average Australian homes.
An Environmental Impact Statement for the project says the water and wastewater infrastructure upgrade and other site improvements are required to ensure the continued operational and environmental performance of the plant until its expected retirement in 2035.
The work will involve the augmentation of the existing Bayswater ash dam to provide additional ash storage capacity.
Improvements will be made to water management systems to ensure continued collection and reuse of process water and return waters from the ash dam.
The project will also increasing coal ash recycling activities to produce up to 1 million tonnes per annum of ash derived product material and reuse of coal ash.
This will involve upgrading existing fly ash harvesting infrastructure, including the installation of weighbridges, construction of a new 240 tonne silo, tanker wash facility and additional truck parking.
Construction and operation of a new coal ash pipeline will also occur.
The watchdog found that slurry from the power station's lime softening plant entered a Wisemans Creek tributary in February 2019, "resulting in water pollution that made its way to a nearby river red gum endangered ecological community".
The material travelled approximately 500 metres, reaching the creek and the river red gums.
The Environmental Impact Statement for the upgrade project acknowledges that Bayswater is regulated under a "large number of planning approvals, resulting in a complex, duplicative and sometimes conflicting regulatory and environmental management regime for the site."
"AGL is committed to continual environmental improvement at Bayswater and has conducted a detailed review of its planning approvals for opportunities for consolidation and improvement," the company said.
The work is being carried out as part of $150 million investment across its key energy assets.