Loy Yang Power has been given the OK by the government to keep trading after declaring debt of approximately $565 million. Australian Securities and Investments Commission was notified of the current situation that Loy Yang Power was in November and since has not issued a “no action” cease trade notification.
The government conducted a report that predicted that in the event that Loy Yang Power was to close, wholesale electricity prices would nearly double which would directly affect household power costs. The report found that the estimated power prices would increase by nearly 80 per cent in Victoria and 45 per cent in NSW.
Other energy industry sources told the Newcastle Herald that Loy Yang Power was emerging as the first big test of the government’s policies aimed at ensuring the electricity market coped with the introduction of the $23-a-tonne carbon price in July without major disruption.
Loy Yang Power lobbied fiercely for amendments to the carbon tax laws that would have allowed deferred payments when producers bought forward-dated pollution permits under the scheme, a provision that was included under the Rudd government’s emissions trading scheme that would have reduced the sudden increase in their working capital requirements.
Loy Yang Power’s chief executive Mr Nethercote said it was ”more than likely” Loy Yang would have had to get a no action letter from ASIC even without a carbon price, which will cost it about $450 million a year.
(Source: http://www.theherald.com.au/ )