A $652 million bailout of the Hazelwood power station by its international joint venture parent companies is "good news" rather than a vote of no-confidence, the federal government says.
European energy company GDF Suez has said it will repay $652 million in debt held by the Hazelwood power plant, which supplies up to a quarter of Victoria's power and about five per cent of Australia's power needs.
Hazelwood's owners, GDF SUEZ and joint venture partner International Power, were unable to renegotiate the terms of its loans with its banks.
Uncertainty about energy regulation in Australia had created a challenging environment for the plant, International Power-GDF SUEZ said in a statement.
They say the plant and its adjacent brown coal mine produce around 16 million tonnes of carbon dioxide each year, about 13 per cent of Victoria's total emissions.
Opposition energy spokesman Ian Macfarlane says the move is further evidence Labor's controversial carbon tax, which starts in five days time, is a "disaster".
"We are seeing a vote of no-confidence in Australia's carbon system and its power-station system, as a result of the introduction of this carbon tax, by major banks in the world," he told reporters in Canberra on Tuesday.
Mr Macfarlane said that in recent days banks had refused to put in $1.1 billion "to keep the Australian lights on".
Queensland's Millmerran power station last week received an injection of almost $478 million from its backers.
But parliamentary secretary Mark Dreyfus insists Hazelwood's refinancing can't be described as a bailout.
"This is good news," he told reporters.
"It was announced as good news by the owners of Hazelwood that they've made a determination to invest in their power plant in the Latrobe Valley."
Mr Dreyfus said that when shareholders decided to invest in their businesses that was a vote of confidence in their businesses.
Coal-fired generation would continue to be part of Australia's power mix until at least 2050, he said.
The federal government is considering paying one of five dirty power stations - including Hazelwood - to close down as part of its carbon pricing regime.
A decision under the so-called contract-for-closure program is due by the end of the week.
The program seeks to support the closure of about 2000 megawatts of highly emissions-intensive generation capacity by 2020.
But Climate Change Minister Greg Combet says he is uncertain the June 30 deadline will be met.
"Those re-negotiations (with power stations) are undergoing at the moment," he told ABC Television, adding it was inappropriate for him to comment.
"But our public policy position is to try and conclude them by June 30 and we'll have something to say about that in coming days."