CS Energy has been accused of hiding safety risks at the incident-plagued Callide coal power station from its joint venture partner, according to Federal Court documents.
The Queensland government-owned company is being sued for $1 billion by IG Power, adding another dimension to the spreadsheet of costs to keeping old coal open for longer.
The lawsuit alleges CS Energy hid major safety incidents and staff warnings from its partner, telling IG Power instead that safety was a priority and it was complying with safety standards, according to the Courier Mail.
The troubled Callide C power station was hit by an explosion in 2021 that took the C4 generators offline for more than three years.
This was followed by structural failures in its smoke stakes, a boiler issue last year, and then another unexpected outage in January that caused two units to trip.
The court documents outline warnings from CS Energy’s outgoing process safety manager about safety budget cuts, major maintenance needs, and ageing infrastructure, and how four fires over five months were explicit signs of trouble, the Courier Mail reports.
IG Power is alleging that ahead of the 2021 explosion that cut power to nearly half a million Queenslanders, CS Energy was knowingly running the plant with no emergency backup, after it didn’t replace blown fuses that connected the system to the plant.
It claims CS Energy never told it of the warnings or problems at the coal power station.
Separately, IG Power also claims its partner withheld warnings about structural problems in the smoke stacks that alleged they were damaged by over-use of chlorine, according to the Courier Mail.
Bill keeps rising
The extra legal costs from the litany of problems experienced at the Callide C power station are another financial element for coal owners to consider.
They also come as the Queensland Liberal government pushes for its coal power stations to keep working at least into the 2040s.
Analysts have suggested that keeping the Callide units online could cost up to $400 million a year, as the market operator warns that the unreliability of ageing coal units remains the biggest threat to grid reliability.
The website Reliability Tracker recorded 90 unexpected outages at coal power stations across the east coast energy market over the spring and summer months of October and February this year.
During this time, renewables met about half of the east coast’s energy needs.
The cost of keeping end-of-life coal power stations online is not lost on major companies.
EnergyAustralia has made it clear behind closed doors that it will close the Yallourn power station in Victoria because its age and unreliability mean it is in no state to keep going beyond the current closure date of 2028.
Renew Economy understands that while the industry fears Yallourn’s exit could be stalled at the right price, as Origin Energy accepted for its Eraring power station in New South Wales (NSW), futures markets are now beginning to price in the possibility of it closing on time.
Other coal power plant owners are also likely to be watching the ongoing, and growing, bill CS Energy must pay for ignoring and putting off the rising maintenance costs that come with owning vintage machinery.
CS Energy is currently facing the $1 billion civil legal proceedings from IG Power but also had to pay a $9 million fine issued last year for cutting power to 400,000 Queenslanders.
Court documents in the current lawsuit allege the cost of repairing the generator destroyed in 2021 at $250 million, and the smoke stacks at $330 million.
The blast last year that saw a boiler taken offline for two months could have been prevented by spending $5.4 million on technical issues, a report last year found.
That blast was caused by a cascade of events after a larger-than-usual clinker or piece of hardened ash fell into the furnace ash and took the boiler offline for two months.
Forensic engineer Sean Brady’s independent report on the 2021 explosion described it as “catastrophic” and a “missile event” could have been avoided.
“The failure to understand and assess risk, and to not effectively apply sound management of change processes in relation to the engineering factors that led to the catastrophic failure, suggests these were not isolated incidents, but rather a symptom of an organisation’s failure to value and implement effective process safety practices,” the report said.
CS Energy spent $80 million on a maintenance program last year on the Callide C operations alone.
Both Callide C units were offline for most of May this year for scheduled maintenance.
