The $1 million sale of a coal-fired power station by the NSW government has been referred to the state's Auditor-General after it emerged the plant's new owners revalued it as being worth $730 million.
The Vales Point coal-fired power station was one of a number of power assets privatised by the then Michael Baird-run NSW government in late 2015.
It was bought by Sunset Power International for $1 million, a price which then treasurer - and now Premier - Gladys Berejiklian said was above its value.
Ms Berejiklian at the time said the sale would save the state from ongoing losses and liabilities associated with the plant's scheduled shut down in 2021. Ahead of the sale the state wrote down its value by more than $370 million.
However, Sunset Power's latest financial reports have valued the plant - and its associated solar co-generation project - at $730 million, and pushed its operational life to at least 2029.
NSW Labor and analysts are now questioning why there had been such a disparity.
The company suggested on Tuesday the valuation uplift had been driven by higher wholesale electricity prices and lower coal prices.
In the last two years wholesale electricity prices have risen significantly, increasing by an average of 8 per cent in 2016, and up to 20 per cent this year.
The rises were partly spurred by snap closures of a number of coal-fired power stations across the National Electricity Market, including the Northern Power Station in South Australia, Hazelwood in Victoria, and Wallerawang in NSW.
Market watchers have also predicted coal generators could benefit from the federal government's proposed National Energy Guarantee policy.
Sunset Power operates Vales Point through Delta Electricity, and sells energy generated to ERM Power; ERM then sells power back to the NSW government.
ERM's majority shareholder is Trevor St Baker, who is also majority shareholder in Sunset, and who founded the company which evolved into Delta Electricity, and spent more than two decades in planning and leadership roles in the NSW and Queensland governments' energy sector.
Sunset has also generated electricity sales 40 per cent higher than those achieved during its final year under state operation, going from $270 million in sales under the NSW government to $380 million under Sunset Power International.
The company said the rapid increase in wholesale prices had been a major component in the current valuation.
It added that there are a number of projects running into tens of millions of dollars that have lifted the operational capabilities of the plant, with the potential of Delta Electricity to spend around $200 million for maintenance and upgrading. This may also be a significant factor in the $730 million price point, which as yet has not been qualified as the net or gross valuation, and may be further upgraded.
NSW Labor energy spokesman Adam Searle told Fairfax Media the privatisation of the state's power assets should have never occurred.
"The privatisation of a monopoly and core service should not have been done," Mr Searle said.
He said the revaluation of Vales Point at more than 700 times above the original sale price demonstrated that privatisation of the power station and other assets was the wrong decision.
"On any superficial analysis, a $1 million price is woefully inadequate. This has raised significant questions," he said.
"[The NSW government] should be held to account, Premier Gladys Berejiklian doubly accountable as she was also treasurer [at the time of the sale]. Due to this, I have referred the matter to the auditor-general."
A NSW Treasury spokesman said the divestment of Vales Point made commercial sense at the time of the sale."The sale was undertaken in a period of excess supply in the National Electricity Market, record low demand for electricity, and unsustainably low wholesale prices, "the spokesman said.
"The divestment had merits and was appropriate at that point in time given the conditions of the market and financial position of Delta Electricity."
Independent think tank The Australia Institute also slammed the government over the sale, and put the blame on a lack of federal leadership on energy policy and accountability in state government.
"This shows starkly how the Australian taxpayer is losing from our politics on energy and environment," TAI research director Roderick Campbell said.
"An old, dirty power station that should be being closed down is suddenly worth a fortune, not because it has become cleaner or more productive, but because we don't have clear policy on electricity, gas, site rehabilitation or climate.
"That's before we consider the station being bought by ex-officials and insiders and the accountability problems that raises. You'd think in a state that has just seen the Obeid-Macdonnald coal farce, the Tinkler coal terminal episode and the Cobbora mine debacle, that accountability would be front of mind, but instead we're seeing ICAC weakened."
The NSW government has, in essence, sold off a power asset in order to pay more for its energy generation, and these costs have passed onto the consumer. It now appears the decision to sell off major assets in a broad stroke may have been premature.