State power co has to subsidise plant when not producing
THE co-generation plants at Condong and Broadwater were a joint venture between Delta Electricity and the New South Wales Sugar Milling Co-operative in 2009.
Delta Electricity is a NSW Government-owned corporation.
Delta controls a large chunk of the power generation infrastructure in NSW, including the Mt Piper and Wallerawang stations.
As a state-owned corporation Delta is controlled by a board of directors.
The State Treasurer Mike Baird, Finance Minister Greg Pearce and Resources and Energy Minister Chris Hartcher are shareholders to make sure the corporation acts in the public's interest.
In February 2011 the co-generation plants went into receivership and are now controlled by Sydney-based receivers Ferrier Hodgson.
Partner at Ferrier Hodgson, Peter Gothard, said the project relied on large loans from the Commonwealth Bank of Australia and the Bank of Scotland.
He said Ferrier Hodgson was not actively trying to sell the plants.
Mr Gothard also confirmed the Delta was making payments to his firm as part of the receivership agreement.
Delta initially said details of the receivership were commercial in confidence.
However, they eventually conceded they have an obligation to pay a penalty, which meets any shortfall between what the plant is expected to produce and what it does produce.
This is because Delta entered into a power purchase agreement with the co-generation project Sunshine Electricity Joint Venture.
Delta would not release the dollar amount being paid to Ferrier Hodgson and denied the payments were designed to stop the plant from operating.
"Delta pays the revenue shortfall - the difference between the money Sunshine Electricity Joint Venture actually earned and the dollar amount required under the Power Purchase Agreement," a Delta spokeswoman said.
Either way, State funds continue to be spent on dormant power generation infrastructure.
"Delta Electricity is frustrated that the co-generation plants remain idle for a significant proportion of the year and is actively pursuing a remedy against Ferrier Hodgson," a spokeswoman said.
Minister for Greg Pearce said he was frustrated by the situation.
"The (NSW) Government supports the efficient generation of electricity in NSW and shares Delta Electricity's frustration that the Broadwater and Condong co-generation plants are not being operated as efficiently as possible," he said.