When will your bills start to ease up?

Ross Greenwood speaks to Josh Frydenberg, Minister for the Environment and Energy, about the meeting in Hobart over the National Energy Guarantee and how much people will save on their power bills

Introduction: When will your bills start to ease up?

Ross Greenwood:  Well, there’s also been an important meeting taking place in Hobart. This is a meeting of The COAG Energy Council. In other words all of the Energy ministers have come together to try and see if they can work on the National Energy Guarantee. Now the good news is that apparently there has been some headway made but not without opposition.

It seems as though while the Commonwealth, New South Wales, Victoria says many were in favour of many of the measures proposed today by the federal government. You found that South Australia and the ACT particular were against many of the proposal. Let’s now go to the Energy Minister Josh Frydenberg who is on the line. Many thanks for your time Josh.

Interview with: Josh Frydenberg, Energy Minsiter

Josh Frydenberg: Nice to be with you Ross.

Ross Greenwood:  Okay, just tell me does the work that you have done that I take any pressure off the energy bills or indeed does it improve the certainty that we will not have a shortage of electricity during peak times in our summer months this year and next year and ongoing?

Josh Fryenberg:  For this summer, we are doing everything we can to ensure that there is no disruption to supply. Today at the meeting of state territory and Commonwealth energy ministers, the Australian Energy Market Operator updated ministers about the work that is being done to ensure that the maintenance schedules of the various generation plans are up to scratch, that fuel supplies are in place and that every other action is underway.

In terms of prices, as you know we’re taking some significant action with the gas companies to ensure there’s no shortfall in domestic supply and that Australians are given access to gas first before it’s overseas. That is starting to have an impact with a fall in the spot price for gas. We’ve also secured agreement from the energy retailers to offer millions of their customers a better deal and we’re already getting many stories of households saving hundreds of dollars a year.

Today, it was a different issue that we dealt with, which is, the long term strategy of integrating energy and climate change with a national energy guarantee. There was agreement to undertake further design work that will be completed by April next year which hopefully will lead to the guarantee, which will then lead to lower prices.

Ross Greenwood:  The guarantee sounds fun and I’ll just get you to quickly comment on this front as we go through. Sydney certainly Tom Koutsantonis would have been crowing today in this meeting then across the Tesla battery, the biggest battery in the world has now been completed in South Australia. Do you believe that the biggest battery in the world in South Australia will help to obviate many of the clear problems that South Australia’s energy security has had?

Josh Fryenberg:  No, I won’t. I don’t believe that it will do that. South Australia has broader systemic issues. Well, more batteries are always welcome. You need to put that in context of the size of the problem that they, and the size of the challenge that they face in South Australia. On any one day, wind can provide 100% of South Australia’s energy needs on another day, zero.

As you know, in the hot summer months, the wind doesn’t blow, there will be greater pressure on the gas supplies in South Australia to generate enough power as well as importing coal fired power from Victoria into South Australia given that South Australia no longer has a coal fired power station.

South Australia does have some challenges. Unfortunately, they didn’t support the work that was being done on the National Energy Guarantee that they did lose the vote neither state did vote against them. As a result now, South Australia will be sending officials to the discussions on the design of the National Energy guarantee.

Ross Greenwood:  On the subject of coal fired power stations, couple of issues here, I did notice that the Energy Security Board of course run by Kerry Short, and she’s been quite outspoken about some of the work that that board has done but also some of the modelling done by Frontier Economics but also on top, there is also suggestions that she says advice shows there will be no new coal investment in Australia by 2030. Would you agree with that assessment by your own energy security board?

Josh Fryenberg:  You need to distinguish between an upgrade to existing coal fired assets where there is a ready indication that there will be some. For example AGL have indicated that they would like to expand the base water plant. Alinta has recently purchased Loy Yang B from Engie Victoria and they’ve indicated that they want to upgrade their plan.

From the decision by companies to build new coal fired power stations. Now we don’t know if any company will do that but certainly by getting more investment certainty into the system then companies can make long term 30 to 40 year bets on whether they want to be a coal asset or a gas fired power station or a new Oval’s with storage.

Ross Greenwood:  It’s fair to say that no new coal investment by 2030. Although, you and I would both agree that it is really the base load power that industry needs, that households need, that community’s needs until you’ve got some other form of energy that can provide that base load power. Are you happy with the Energy Security Board to go out and simply say that they will be, in black and white, no new coal investment by 2030?

Josh Fryenberg:  Well we asked the Energy Security Board to model their plan and I am pleased with the results. It shows that the savings to households will be around $400 in those years between 2020 to 2030 compared to what people are paying today. Now this is on top of what will come from the deals we’ve done on gas and on networks and on retailers. There is price relief coming to Australian households.

 

Ross Greenwood:  My question also is, who is waging the tail of the Energy Security Board? Is it you as the minister or who actually determines what its main ideas?

Josh Fryenberg:  Well we task the energy security board to undertake this work. That’s now been presented to the states. The energy security board, like energy policy more generally Ross, is a function of both state and federal responsibility. As your listeners know, it’s being state governments that have owned the coal fired power stations within their own states.

It state governments that have owned the coals and the wire companies and still do and it’s State Governments that have owned the retailers. This is different responsibilities and ownership between the federal and state level. That’s why you need these agreements through COAG to get a resolution of what has been an intractable problem for Australia over the last decade as we seek to get lower power prices but also a more reliable system.

Ross Greenwood:  Another couple of things you mentioned Alinta a little earlier on and you also mentioned the Loy Yang B power plant $1.2 billion, I’ve noticed Trivason Barker who’s with Delta Electricity, that company lost out to Alinta, he’d raised questions as to how Australia or how government, state or federal could allow that asset, the Loy Yang B Power Plant which is, you’d have to say pretty critical to Australia’s infrastructure and needs, could be sold off to a Hong Kong Chinese business conglomerate, the Chai Tai Fook enterprises company, which already has many other bits of electricity infrastructure here in Australia. He says why is this deal not subject to foreign ownership restrictions. Is there a good answer to that?

Josh Fryenberg:  Well, as you know Alinta has been a player in the domestic energy place for some time and not only do they now Loy Yang B but they also own a series of other assets. Those issues about the sensitivities of foreign ownership are matters for the Treasurer and the Foreign Investment Review Board. One of the good things from Alinta taking ownership of Loy Yang B is that they’ve made it very clear they want to boost the competition in the retail market.

As you know, in Australia we have a very concentrated system. We have the Big Three Origin, AGL and Energy Australia. Now, if you can add fourth, you will get more competition like we want to see more competition in the banking sector, in other parts of our economy. Competition is good for consumers because it does mean lower prices.

Ross Greenwood:  Okay, the point is, people listen to this. This is where energy policy is very complicated, you know it, I know it. It boils down to a couple of three key things as I see it. Now the most difficult one of those is people’s jobs and industry generally. People would know if they’re working in an energy intensive industry, that if there’s any outage or if prices go through the roof that their jobs might be at risk.

Number two, the bills that people pay is absolutely key but most importantly is whether the lights are going to stay on and whether in fact we have energy security in this country, that’s where it boils down to. Cut to the chase on those three. Number one, are the lights going to go out?

Josh Fryenberg:  Well, everything is being done to ensure that they don’t. Now as you know South Australia was the first state to go into a state wide blackout. Victoria has had some challenges and so has New South Wales. Everything is being done to ensure that those lights don’t go out and unfortunately both in Victoria and South Australia they’ve got themselves into a situation with only diesel generators as backup. There is one course-

Ross Greenwood:  Will that be enough do you reckon or not?

Josh Fryenberg:  Well, your guess is as good as mine. The reality is we can only take the advice of the experts on Energy market operator But there is one cautionary note here. Which is, when you take out of the system, a generator as big as Hazelwood, more than 20 percent of Victoria’s supply, it does have a negative impact. And we have to be very cautious, that the next time I call for a generator is thinking about its future. That we need to see that the system does not lose reliability or affordability. That’s why you’ve heard the Prime Minister and I, raise issues about Ladell, in New South Wales. Because we want to ensure that a like for like which is in it’s place.

Ross Greenwood:  Okay. Number two, bills. Do you believe you’ve got a situation now where there is enough electricity coming on board, over the next three years, to overcome the very crippling electricity bills that many Australian families face?

Josh Fryenberg:  I do believe we are doing everything possible to reduce that pressure on bills, recognizing that there is no silver bullet. It’s at every stage of the supply chain. It’s the networks, it’s the generators, it’s the retailers. The good news out of the National Energy Guarantee Ross, is that you will see big businesses that use a lot of power, save hundreds of thousands of dollars or indeed millions of dollars. So if you’re a big supermarket, you could save $400,000 plus, on your annual bill. If you’re a chemical factory, $1.4 million and if you’re a paper manufacturer $10 million. That does mean more security for jobs, as those industries compete against imports or indeed are involved in the export market.

Ross Greenwood:  I will tell you what, always glad to have you in the program. Josh Frydenberg he’s our Energy Minister. As I say you can see the efforts that have been gone to make certain, A, there’s enough electricity although there can be no guarantees. B, that your bills come down or at least start to be moderated and C, that industry is not driven out of the country because of those very high electricity bills. In the meantime, Josh Frydenberg I appreciate your time.

Josh Fryenberg:  Great to be with you. Take care Ross.

 

 

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