The owner of Australia's largest coal-fired power station will "feel the wrath" of NSW residents if it tries to gouge taxpayers in return for keeping the plant open, the state's treasurer says.
A review has recommended the state work with Origin Energy to extend the operation of the black coal-fired Eraring Power Station to avoid electricity shortfalls and power hikes due to its scheduled closure in 2025.
The government plans to enter negotiations with Origin, but Energy Minister Penny Sharpe said it was not known how long the plant's life would be extended or how much it would cost.
Treasurer Daniel Mookhey on Wednesday said the government would have "some tough conversations" with Eraring's owner, which he said had done "very well" out of the 2013 privatisation of the power station.
"I want to send a very clear message ... Origin will feel the wrath of the people in NSW if they see this an opportunity to game the system," he said.
An Origin spokeswoman said the company would continue to engage with the government on plans for the power plant and it was committed to a goal of ending coal generation as soon as there was enough replacement renewable power.
Former Liberal treasurer and energy minister Matt Kean earlier this week said he had been briefed it would cost as much as $3 billion in subsidies to keep the plant open, however Labor figures have questioned the source and accuracy of the figure.
Other industry sources have put the likely cost to taxpayers in the hundreds of millions of dollars per year.
Opposition Leader Mark Speakman said the government must come clean about the cost to taxpayers and the risks to reliability from extending Eraring's life as ageing coal-fired plants could experience outages.
"The government has to be open and transparent about what the (reliability) risk is, what the cost is, what the impact on consumers is and what other options it has looked at," he said.
Mr Speakman said the government needed to ensure keeping Eraring open was the cheapest and most effective option for providing reliable power.
The review predicted higher energy costs would result from closing Eraring, which supplies up to 25 per cent of the state's electricity needs.
Ms Sharpe said in addition to entering talks with Origin on extending the plant's life, the government would investigate alternative solutions to deliver more energy generation, transmission and storage.
Environmental and renewable energy advocates have slammed the decision to potentially prop up the coal-fired power station with public money.
Australian Associated Press