Vic mines told to cough up more rehab cash

Coal mines in the Latrobe Valley should be forced to cough up tens of millions of dollars more for the expensive rehabilitation works that will be needed after they close, a new report suggests.

The final volume of the Hazelwood Mine Fire Inquiry Report, released on Thursday, has found a huge gap exists between the mines' so-called rehabilitation bonds and the actual amount that will be required to restore the sites.

"The gap ... exposes the state to the risk that it will bear a significant proportion of the cost of rehabilitation in the event of default by one or more of the mine operators," the report says when recommending a more effective system be developed.

The inquiry board suggests, in the interim, that the state resource minister considers doubling the existing bonds to at least $34.25 million for Yallourn, $36.7 million for Hazelwood and $56 million for Loy Yang.

That would still be just 50 per cent of the current estimated rehabilitation liability for each.

The report also raises concerns about plans to flood the Latrobe Valley mines when they are closed down "in circumstances where there may not be sufficient water available".

"Until we understand the costs of using Victoria's precious water to fill coal mines we can't be confident that lakes are a suitable solution," Environment Victoria said in a statement on Thursday.

"The big unknown of turning the mines into lakes is where the water could come from."

Thursday's report recommends that by mid-2017 the government establishes an independent mine rehabilitation commissioner, to be replaced by a new Latrobe Valley Mine Rehabilitation Authority no later than 2026.

The board also calls for a post-closure trust fund to be set up "to mitigate the likely costs arising from ongoing monitoring, maintenance and management of the rehabilitated mine sites after closure".