16 September 2002 – The 2000 MW Loy Yang power plant in Australia’s Victoria state is to be put on the market after co-owner Horizon Energy Investment Group today agreed to seek a buyer in the wake of reported losses from the plant of $A18.57m ($10.19m) for 2001/02.
Horizon’s US-based partners, CMS Energy Corp and NRG Energy Inc, have already indicated their intentions to offload their stake in the brown coal-fired generator in Victoria’s Latrobe Valley.
Horizon, which has a 25 per cent interest in Loy Yang, said it would join the US companies to investigate the possibility of a sale. In a statement, Horizon said while Loy Yang had contributed $A9.8m ($5.38m) to its (Horizon’s) earnings for the year to June 30, 2002, the carrying value of its investment in the generator exceeded the recoverable amount. And there were uncertainties which could impact on investment’s value in the future, including electricity pool prices, the situation of Loy Yang’s debt facilities, the fact Horizon was a minority shareholder, the worldwide market for electricity assets and the financial situation of the other Loy Yang partners.
Horizon’s 2001/02 loss compared to a net profit of $A404 000 for the previous year. Total writedowns for 2001/02 came to $A28.9m compared to $A833 000 for the previous year. And while revenue for the year ending June 30, 2002, increased to $A10.3m from $A1.2m, earnings per share fell to minus 5.54 cents, compared to positive 12 cents for 2000/01.
Meanwhile Loy Yang reported a net operating profit for the year to June 30, 2002, of $A39.3m, compared to $A2.8m for the previous corresponding period.
Total revenue increased to $A642.5m from $A578.7m while costs rose to $A603.2m from $A575.9m. The increase in revenue came despite an outage of the generator’s Unit 4 from late December until mid April. But the total revenue does include $A27.6m in insurance proceeds as a result of this outage.
Loy Yang is one of three companies awarded permits by the Victorian government to explore the untapped brown coal deposits at sites in the Latrobe Valley. It is the first time since the 1920s developers have been given access to new coalfields in the region.