The Hazelwood Mine Fire 2014 -- Evidence of ‘organisational path dependency’ in public and private management

Abstract

The state built brown coal (lignite) power generation industry in the Latrobe Valley, Australia started in the 1930’s. The State Electricity Commission Victoria (SECV) managed this industry until its disaggregation, corporatisation, and privatisation, into four privately owned power stations over the 1980s and 1990s. Engie (72%) and Mitsui & Co (28%) privately owned the oldest of these plants, the Hazelwood Power Station and Mine (formerly known as GCF Suez S.A.), when on 9 February 2014, a large out-of-control brown coal fire commenced in the ‘open-cut’ mine adjacent to the Hazelwood Power Station. Although fires are typical in coal sites, this fire became a crisis, burning for 45 days and a cause of considerable stress and dislocation to the local population of 70,000. After the crisis, the Victorian State Government conducted a public inquiry into the disaster, instituted a long-term health study of affected residents, and established the office of Commissioner for Mine Rehabilitation. In 2017, the private owners permanently closed the Hazelwood Power Station due to its advanced age (Engie 2016). This was a huge loss of jobs and a loss of 25% of the state’s available power. The subsequent Hazelwood Mine Fire Inquiry (2014) concluded that, “the Hazelwood mine fire was a foreseeable risk that slipped through the cracks between regulatory agencies” (Hazelwood Mine Fire Inquiry, 2014). 

This paper examines the public management of the mine fire crisis using the model of ‘organisational path dependency’ developed by Sydow, Schreyogg & Koch, (2005, 2009) adapted to this situation of ‘inter-organisational path dependency’. According to Sydow et al. (2005, 2009), path dependence is a process often initiated by a single event, which over time establishes a path that is self-reinforcing due to the effects of coordination, complementary, learning, and, adaptive expectation factors. These effects cause the path to become irreversible, ‘locked-in’ to inefficiencies, so that managers believe they lack the power to act outside the path. This eventually leads to the death of the organisation (Sydow, Schreyogg & Koch, 2009). 

This paper refers to Mine-Fire Inquiry transcripts and other publications in order to examine the utility of path dependency theory in explaining events before and after the mine fire crisis. It identifies a watershed and subsequent self-reinforcing factors that led to mismanagement of the fire. Moreover, this catastrophe became the ‘path breaking event’ that changed public management in this sector and from which new paths may emerge.