The Construction, Forestry, Mining and Energy Union began the strike this morning, the second this month and the longest in more than a decade.

The two parties have been in talks for the past eight months over a new four-year wage agreement.

Despite offers of a 25% pay increase, the union is demanding a consult-and-agreement clause be added to employee contracts to ensure management consult staff before making any big decisions about the company.

Energy Australia operations and construction director Michael Hutchinson told ABC Radio this morning that energy generation at the plant would be cut by 20%, despite a skeleton staff remaining in place during the strike.

He confirmed that previous stoppages and threats of stoppages over the last month had already cost the company hundreds of thousands of dollars, as well as leading to the cancellation of work for 600 contractors last week.

"There's a risk to carrying out our works program and that goes to jobs and employment," he said.

According to Energy Australia’s website, the plant uses 2400 tonnes of brown coal every hour to generate power to supply approximately 22% of Victoria’s electricity needs and approximately 8% of the National Electricity Market.

Australia’s second-largest open cut mine is adjacent to the Yallourn power station and annually mines around 18 million tonnes of high moisture brown coal.

The mine provides a secure, continuous source of fuel for generation at the Yallourn power station and has ample reserves to meet the projected needs of the power station until 2032.

Fair Work Australia has approved an unlimited number of 24-hour strikes during negotiations.