Having been unable to change the original deal – which was set up many decades ago – the state government entered into negotiations with Alcoa and the Loy Yang B power company. As a result, the state will now pay an increased power price, but can pass most of it on to Alcoa as the new deal allows the US aluminium producer to receive Federal government compensation under its classification as an emissions-intensive business.

Alcoa’s general manager of government relations and climate strategy, Tim McAuliffe, says the new deal will benefit the company.

The deal also benefits the Victorian taxpayer.

The smelters involved in the deal are Alcoa's Portland and Port Henry production plants.