Australian gas and electricity retailer Alinta Energy confirmed yesterday that it will shut down its Flinders Operations in Port Augusta (Northern & Playford B Power Stations) and Leigh Creek (Leigh Creek Mine) due to “increasingly uneconomic” circumstances.
The closure will affect some 440 Alinta employees, who were told that the shutdown will occur by 2018, or even earlier, but not before March next year.
Alinta Energy CEO, Jeff Dimery said the company was committed to working closely with the SA Government, the representative unions and local communities in Leigh Creek and Port Augusta to “prepare for the cessation of the Flinders Operations”.
“There are approximately 440 employees that will be affected by this difficult decision. Their welfare and that of their families is our highest priority at this time,” Mr Dimery said.
“All affected employees will receive their full entitlements and the company will provide additional support services to assist during this transition. It is anticipated that a total in the vicinity of $75 million in redundancy benefits and entitlements will be distributed to employees across the Flinders business.”
He said the company had investigated a range of options over recent months only to find that the business cannot return to profitability.
“Throughout the four and half years that we have been running the business we have investigated all possibilities to find a viable economic solution for its continued operation. During this period the company has incurred operating losses in the vicinity of $100 million whilst at the same time investing an additional $200 million to extend the operating life of the Flinders business,” Mr Dimery said.
“The decline in demand for energy, as households have become more efficient and the number of industrial customers has declined, combined with policy settings designed to support significant growth in renewable energy generation have together had the effect of causing a significant oversupply of power available to South Australia.”
He said the Alinta will now proceed with the development of a closure plan in consultation with employees and other key stakeholders, with a timetable for the closure to be finalised based on further review of critical risks associated with extended operation.
The company also communicated that it would work collaboratively with Governments and the market operator to assist in the transition of its generating capacity out of the system, adding that yesterday’s announcement will not impact the supply of electricity to its residential and business customers.