Update 12 July 10:05am

AGL has announced the appointment of GE Power Australia Pty Ltd (GE) to complete repairs on Unit 2 at the Loy Yang A Power Station.

GE has been selected to complete the repair works following an extensive procurement process, involving multiple vendors.

AGL Executive General Manager Group Operations, Doug Jackson, said ensuring the unit’s future reliability was a critical factor in selecting a vendor.

“We understand the importance of Loy Yang to Victoria’s electricity supply, GE is the Original Equipment Manufacturer (OEM) and has the expertise and experience to complete this complex repair work,” Mr Jackson said.

“A detailed technical analysis on the generator has been completed and the repair will involve what’s known as a full rewind, which will see the replacement of the original coils and copper parts.

“This will deliver a proven design and engineered solution that meets AGL’s technical specification.

“The capital cost of the repair and upgrades at the station during the outage window will be $57 million. Most of the work will be done by local providers and is expected to create around 200 local jobs during the outage.

“The expected return to service date remains mid-December 2019 and we’re looking at other ways we may be able to increase generation from across our portfolio while these repairs take place,” Mr Jackson said.

Update 11 June 12:27pm

AGL Energy has completed an assessment of the extent and impact of an outage at Unit 2 at the Loy Yang A power station in the Latrobe Valley.

AGL now believes this outage may extend seven months and, as a result, have a material impact on its financial results in FY20.

The unit has been out of service since 18 May 2019 following an electrical short internal to the generator, which caused consequential damage to the stator and rotor components.

AGL’s initial expectation was that it would take between two to four months to return the unit to service pending results of internal generator inspections.

Following rotor removal and cleaning, further technical assessments revealed a more extensive level of damage than was previously assessed, the full impact of which has now been determined.

AGL now expects it may take until December 2019 to return the unit to service and ensure its ongoing reliability. This duration of repair reflects the unique original technical design specifications of the unit and the extent of damage.

AGL does not expect any material impact on its results for FY19 from this outage. AGL continues to expect Underlying Profit after tax in FY19 towards the midpoint of its guidance range of $970 million to $1,070 million.

However, while AGL is seeking to mitigate impacts to portfolio availability and cost of the outage, AGL currently expects its extended nature to lead to a reduction in potential Underlying Profit after tax in FY20 of between $60 million and $100 million. Detailed assessment of the required repair process and likely financial impact is continuing.

Any material recoupment of these impacts via insurance claims is not likely to occur until FY21.

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