Thursday, 31 August 2023
Bills
Energy Legislation Amendment Bill 2023
Bills
Energy Legislation Amendment Bill 2023
Second reading
Debate resumed.
Bev McARTHUR (Western Victoria) (14:03): Now, where did I finish? I do not know where I finished, but I will start again. I thought it might be interesting to give you a little story. Last week the shadow minister and I went on a trip along the two transmission line routes. It was depressing and eye opening. I have got to tell you, there are people out there with serious mental health concerns over how this transmission line rollout is affecting lives. People have been in hospital. To quote one of the people who is not long out of hospital, ‘If the government continues down this path, they’ll have blood on their hands.’ That was the warning we were given about the way you are conducting the rollout of transmission lines in this state.
A figure we heard repeatedly came from the Victorian government’s own projections of what the future will look like. The then Department of Environment, Land, Water and Planning, now the Department of Energy, Environment and Climate Action, published its policy directions paper for offshore wind in 2022. On page 19, figure 7 states that to achieve the 60 gigawatts of generation needed for the state’s 95 per cent renewable energy target using onshore wind and solar would require up to 70 per cent of Victoria’s agricultural land. I repeat: 70 per cent of Victoria’s agricultural land would be required to meet the renewable energy target.
We are not about to build tonnes of pumped hydro, and even offshore wind seems to be running into obstacles. You know, there is a whale somewhere in the offshore wind space that is a concern, so we will not be able to have an offshore wind farm because there will be a whale problem. Never mind about the people problem that exists all the way along these lines. We will probably stop an offshore wind farm because of whales. We are stopping one, as I said earlier, because of brolgas, and we have ended old-growth logging because of other wildlife. So the offshore wind farm issue is serious. We have now got basically no projects offshore, but even if we did they would meet a very small fraction of what is required. But there is a better way we could deliver the energy targets that you have demanded without devastating the agricultural community, the environment and the lives of so many people and communities from Sydenham to the New South Wales border.
Tom McIntosh: We’ve been asking for days to hear from your side an idea.
Bev McARTHUR: Well, the ideas are there, mate, and they are very good. It is called plan B, if you have not come across it, and it uses many existing easements. It will be cheaper to build the transmission lines and far less impactful on the communities. I do not know whether you understand what happens if you build 80-metre-high transmission towers across a piece of agriculture – especially a potato farming business – because there are easements involved, and you cannot farm within these easements, obviously. There are boom sprays required, which actually reach higher than some of the dropped lines of transmission. And why are they dropping down? Because you are trying to pump more power through them, and they then get weightier and they become closer to the ground.
We have got a situation where Australian Energy Market Operator’s immediate grid development plan in Victoria includes another 650 kilometres of transmission lines with 1270 kilometres on brand new easements – brand new, not using existing easements, because of course the business model for this is to build more transmission, not retrofit, make use of what is there and do it better. This is 40-year-old technology you are embarking on. Try and get with the modern era and use the best possible technology. Around the world they can do it, but it seems here we are going to use AEMO’s old-fashioned approach of putting new transmission lines all over this state, crisscrossing the place like a spider web and boring your way through biolinks, even over a reservoir that is used for firefighting. So that will prohibit the use of firefighting aeroplanes to put out a fire in the Lerderderg forest. Now, that will be great. If that catches on fire, forget about Bacchus Marsh – it will be gone. You are in the outskirts of Melbourne with a fire caused largely by electrical elements. There was a fire caused by electrical elements in my electorate a while ago in the St Patrick’s Day fires – totally caused by electrical elements. You have got trees that fall on powerlines, and then they fall down, because nobody clears the roadsides these days. So you have got metre-high phalaris, which is like a fire wick, and you wonder why there is a fire. You do not clear the roadsides and you insist on having wildlife corridors on roadsides, which end up as fire wicks, and you create massive bushfires. Thousands of acres were burnt and umpteen thousands of stock were lost – fortunately no lives. So we have to do it a better way.
AEMO are a disgrace the way they are unrolling out their transmission idea for the whole of the eastern seaboard – a total disgrace. Frankly, this government is a disgrace. You should be looking at all forms of energy if you want to increase supply and not restrict yourself to one variation, but you should look at the very best way you can transmit the energy that has the social licence of the community to deliver it. We need to work out how it is done, best practice, around the world and in other parts of Australia as well. So while we are debating this bill I think we have got to come to grips with the greatest issue of energy supply, which is transmission.
Wendy LOVELL (Northern Victoria) (14:11): I rise to talk on the Energy Legislation Amendment Bill 2023. This bill obviously forms part of the government’s commitment to managing the transition of the energy sector to achieve net zero emissions by 2045 while ensuring that we have reliable energy for Victorian consumers. But I do not think they are fulfilling the second part of that, ensuring reliable energy.
This is an omnibus bill. It amends the National Electricity (Victoria) Act 2005 and also the National Gas (Victoria) Act 2008, and it is supposedly going to deliver better outcomes for Victorian energy consumers. But what we note about this bill is that it does not supply one additional kilowatt of electricity. There is no additional electricity that is going to be generated for the use of Victorians because of this bill. What this bill does is it shifts responsibility. It shifts the responsibility from the government for ensuring secure energy supplies and places that responsibility on retailers and large customers. It places the responsibility on them to secure contracts with electricity producers to manage future supply. It does this by creating retailer reliability obligations that the minister can enact when they feel it is necessary. This, as I said, is not going to generate any additional electricity for Victorian consumers, who are currently suffering so much in this state. Their bills have skyrocketed. They are extremely concerned about the government’s phasing out of natural gas as an energy source in this state and many of them are very aggrieved by that.
What we have seen overnight is a report released by the Australian Energy Market Operator, AEMO – the Electricity Statement of Opportunities it is called – which is a 10-year outlook. That was released last night and reported on in the Herald Sun this morning. It paints a very bleak picture for reliable electricity supply over the next decade here in Victoria. In fact the report has warned that the accelerated retreat from coal generation has not been met with enough renewable energy sources to consistently guarantee supply. So it is already telling us that over the next 10 years we are going to have shortages of supply – because this government has done nothing to secure future supplies of energy in Victoria.
The report highlights a number of areas, including that Victoria is facing more regular blackouts over the next 10 years and that coal, gas and diesel shortfalls have been identified as a material risk to the grid. It also says that the Andrews government’s ban on gas will have a significant impact on winter electricity consumption, meaning we will need to use more electricity if we do not have gas for heating. It also says that Victoria’s concerns will spike with the closure of Yallourn power station in 2027–28, and it says that transmission projects coming on line are not keeping up with the pace of traditional coal-fired power station closures. This report outlines that this government have failed Victoria, that they have failed to secure our energy supplies into the future and that we are in a parlous state in this state.
It also predicts that over the summer we are going to have significant blackouts. It says that soaring summer temperatures are expected due to El Niño and that this will seriously test supplies, with the biggest risk of blackouts being in January 2024. In my electorate in January 2024 on many, many, many days in many, many, many electorates the temperature will be in excess of 40 degrees. We sometimes have days on end of 40 degrees in areas like Mildura, Swan Hill, Echuca, Shepparton, Wangaratta, Wodonga and many others throughout the north of the state. People in these areas will die if they do not have air conditioning. The elderly will die, and it will be because there is no electricity available to them. I would hope that the government do something rather quickly about producing electricity, but as we know, it takes many years to bring new supplies on line, and this government have wasted the last nine years in securing additional supplies in this state.
The report notes that 62 per cent of the country’s coal-fired generation is due to close before 2023. It goes on to say that new and planned renewable projects are struggling to make up the potential shortfalls, particularly during extreme weather periods, as the population rises and the states are facing the biggest changes to our supplies that we have seen since the introduction of electricity and reticulated gas in this state.
It is a sad situation Victoria finds itself in because of ideology. It is time that both Labor and the Greens realise that their ideological views are making it harder for Victorians not only in the space of energy – as we see in this bill, with there not being enough energy to generate power for people to keep their heating going, to keep their air conditioning going or indeed even to cook their food or keep their lights on at night – but also for the dairy farmers in the north of the state with their need to keep milk at lower than 4 degrees Celsius in order for it to be able to be used for consumption and to be picked up by the milk processing plants. If there is no electricity, this state is going to face a huge shortage of milk, and that will be squarely on the shoulders of this government.
But it is not only in the electricity space that the Greens and Labor policies are failing Victorians. We can also look at the housing space and some of the proposals that they are putting forward that would absolutely kill the private rental market and would have dire consequences for people in this state. Rents will absolutely balloon if we go ahead with the types of policies that these two parties are putting forward. If they say they are going to have a rent cap, well, that will just kill the private rental market, and then those properties will be sold off. Governments do not have enough properties to house the people that would need to be housed in this state, and many of those people would not qualify for subsidised housing anyway, so where are they going to live? Where are they going to live if there is no private rental market? They are the sorts of things that this government need to consider.
But when it comes to electricity and the supply of natural gas, this government is failing Victorians significantly. Mrs McArthur spoke very eloquently about the VNI West project, which impacts largely her electorate but also parts of my electorate. There has been a lack of consultation with communities about those towers going through their farms and the impact that that will have on productivity and a lack of information around whether they will be compensated for the loss of productivity on their farms and whether that compensation will be ongoing. It is just appalling.
This government just does things to people rather than doing things for people. Governments are supposed to govern for the people, not for the government at the expense of people. But that is something that Labor never understands, particularly when you get a tired Labor government that has run out of ideas. How many pieces of legislation have we had this week? Two. We have had two pieces of legislation this week.
Sonja Terpstra: On a point of order, Acting President, I note that the bill that we are debating at the moment is called the Energy Legislation Amendment Bill. A lot of Ms Lovell’s contribution that I have heard has related to the rental crisis and then finally attacking the government about all manner of things that do not relate to energy. I would ask that perhaps Ms Lovell confine her contribution to the scope of the bill.
The ACTING PRESIDENT (Bev McArthur): Thank you, Ms Terpstra. I note you are not tired. Ms Lovell might come back to the bill, but certainly housing is involved in energy.
Wendy LOVELL: Thank you, Acting President. I had moved on from the rental market. I had come back to the legislation before us, which is one of the two pieces of legislation that we have for debate in a whole sitting week of Parliament. I can remember the days when we would debate six bills in one day in the Parliament. We would stay all night and debate bills, because there was a legislative agenda in the state. But this government has no legislative agenda. They have run out of ideas and all they are doing is imposing on people in Victoria ideologically driven pieces of legislation that are going to make it harder for Victorians in this state and make electricity even more expensive.
Their failure in the electricity area is going to result in major blackouts and could result in the deaths of some of the elderly if they cannot run their air conditioners. It is not just about when there is no electricity to run their air conditioning but also about the cost of running that air conditioning. This is going to be devastating for many, many Victorian households, because you are driving up the cost of electricity in this state – driving it up. That is going to be devastating for families, for the elderly – for every Victorian. And for businesses – you go into businesses now, businesses that used to be quite bright to display their stock, and you note that two-thirds of their lights are turned off because they cannot afford the electricity bills, because the cost of energy has risen so much under Labor.
Labor should hang their heads in shame. They are making it harder for Victorians in every aspect of their lives. It is time that we moved on from the ideologically driven agenda and got back to governing for Victorians, not doing things to Victorians.
The ACTING PRESIDENT (Bev McArthur): Ms Terpstra, in purple, will speak now.
Sonja TERPSTRA (North-Eastern Metropolitan) (14:23): Thank you very much, Acting President McArthur. I love your acknowledgement of my colourful dress code today, being purple. I rise to make a contribution on the Energy Legislation Amendment Bill 2023. Unlike Ms Lovell’s contribution, I am going to inform the house about what this bill is actually about. I will talk about what it is about rather than what is not about and things that have nothing to do with anything in relation to the bill. It was quite a wild ride there, I might say.
I will begin my contribution by outlining for the house and for those who might be playing along at home – the three people and a hamster who might be watching us right now. They will be enlightened to know that the bill is about none of the things that Ms Lovell just talked about. The bill has three components. The first adds decision-making criteria to the Victorian legislation in the event that the Minister for Energy and Resources triggers the retailer reliability obligation. There is the first thing. The second thing is that it enables an alignment between penalties applied to Victorian gas market participants and to those in other jurisdictions. The third change in this bill is that it changes outdated references to the gas distribution system code, which is now known as the Gas Distribution System Code of Practice. So these amendments are technical in nature but provide confidence to Victorians that energy markets are working in their favour.
We just heard a whole bunch of stuff over there that had nothing at all to do with any of this, and before I get into some of the detail about this, I am proud to be part of the Andrews Labor government, who have got such a strong track record. We heard all the gloom and doom today about, ‘The sky is falling. There’s going to be no electricity. It’s going to be terrible and it’s bad for Victorians. It’s all going to come crashing down.’ Well, I tell you what, the amount of people who have taken up solar on their rooftops are smashing it. We are going to smash our renewable energy targets, and we are working incredibly hard to reduce our carbon footprint as well.
Tom McIntosh: The highest per capita in the world.
Sonja TERPSTRA: The highest per capita in the world, and then we are rolling out batteries as well. I will get into some of these details in a second. To simply say that we will have no electricity is fanciful. Our wind farm projects – in Victoria, we are lucky that we are one of the windiest places in the world, especially in Bass Strait. But off Gippsland the Star of the South wind farm, I am really excited to see that chugging along really nicely. There is nothing to be gloomy and doomy about.
I might point out that those opposite privatised our electricity market, so the retailers now that we have in the market generate all of these profits and take them offshore, overseas to other incorporated entities that do not reinvest back into Australia or in Victoria. So to say that Victorians are somehow losing – let me tell you, Victorians are losing under this system right now. They talk about pensioners. There are so many people, not only pensioners, in Victoria who have taken full advantage of the power saving or energy saving bonus, however you want to call it, because they know they can apply that off their power bills and it means that they will have more money in their pocket to spend on things that they might enjoy. We are directly bringing down the cost of electricity by doing that for those people. It has been a great success; there are thousands and thousands and thousands of Victorians that have taken up the opportunity to take advantage of the power saving bonus.
Honestly, it is like we are in an alternative universe over here. I was sitting here with my colleagues Mr Batchelor and Mr McIntosh and we were talking about Smithers and all these sorts of things, and the Simpsons. Honestly, I often wonder if those opposite ever got into government what they would in fact do. Well, what we know they do –
Tom McIntosh: They don’t know.
Sonja TERPSTRA: That is right, they do not know, but they like to occupy the office and do absolutely nothing with it – because I can go on and talk about, like I said, the Kennett privatisation years, because over there what they like to do is go ‘It’s all about small government’ and do absolutely nothing. But they will occupy the office and smash government assistance to any Victorians and just make sure that the private market can let it rip and go writ large and their rich mates can make profits at the expense of Victorians. What we saw under them was Kennett selling off 300-plus public schools and impacting students’ education and learning, and then they sold off our electricity market.
Tom McIntosh: That’s why people voted for the SEC.
Sonja TERPSTRA: That is why people voted for the SEC. Those opposite forget that at the last election we actually increased our majority. So I do not know what they are talking about when they say what a terrible government we are, because obviously the electors decided to return us and increase our majority – like, wow, we must be so bad over here on this side of the chamber, we must be absolutely terrible. Shame on us for actually winning another term and increasing our majority.
So again, I think Victorians have spoken and have said that they have confidence in this government to continue to run the state and continue to take strong action on climate change, to continue to drive our renewable energy targets through clean energy, creating tens of thousands of jobs, and not to mention – I need to mention it again – to bring back the SEC. Bringing back the SEC – we cannot mention that often enough, because we know those opposite hate anything with the word ‘public’ in it. You hate the public. You hate public education, you hate public health and you hate anything to do with the public. And as we know, utilities like electricity need to be in the public’s hands. So those opposite have no credibility, and again, all they can really do is sit in this chamber and yell out things that no-one is listening to.
Tom McIntosh: And how many years did the coalition have federally to do something?
Sonja TERPSTRA: Well, a lot of time, but this is the point: they did nothing, because all they like to do is occupy the office and do absolutely nothing with it when they get there.
Let me return to the details of this bill, because I want to just talk a bit about our ambitious renewable energy targets –
Wendy Lovell: Tell us how it generates more electricity.
Sonja TERPSTRA: because Ms Lovell thinks we are going to run out of electricity – wow. Our ambitious renewable energy targets are the foundation of that agenda, setting clear direction for investors to follow. There are investment opportunities – wow, who woulda thunk it? We have set a target of 65 per cent renewable electricity generation for Victoria by 2030 and 95 per cent by 2035 – but remember: we are going to run out of electricity, right? And when we set a target, we will hit it. We smashed our 2020 renewable energy target of 25 per cent and we have increased our 2030 target from 50 per cent to 65 per cent, so we are smashing it. We have supported the targets with policies that promote the development of new renewable energy capacity. So when Ms Lovell thinks that we are going to run out of electricity – again, flawed logic, because we have just talked about our targets and how we are going to increase capacity, because we know how to do that. Our first Victorian renewable energy target auction was the largest of its type in Australia when it launched, and it supported five projects, totalling 800 megawatts of new capacity – there you go, Mr McIntosh. Do you think we are going to run out of electricity? Of course we are not. We are going to keep going.
Our second Victorian renewable energy target auction, the VRET 2, will bring forward 623 megawatts of new renewable generation capacity and deliver up to 365 megawatts of new battery energy storage – there you go. So if you do not have enough to generate, it is going to be in a battery, ready for you to use. So again, our $1.3 billion – let me say that again; $1.3 billion – Solar Homes program is delivering renewables at the household level. We have already helped over 200,000 households access rooftop solar. Like I said before, Victorians are taking up the opportunity to put solar panels on their rooftops at a rate of knots. This year rooftop solar has generated nearly five times the power generated by gas in Victoria, and it will only grow as the 10-year Solar Homes program continues to roll out. And we have invested $540 million from the Renewable Energy Zone Fund to upgrade our grid and unlock new capacity.
As a result of policies such as these, Victoria has more than tripled renewable energy generation since 2014. But again, those opposite want to sit there and say we are going to run out of electricity. I have just explained to the chamber and for those who are playing along at home how that is not going to happen, because those opposite have got no plan, they have got no action – they cannot do anything. If we say something, they will say the opposite. I think our esteemed colleague the Prime Minister likes to refer to those opposite in his realm as the ‘noalition’, meaning they just say no to everything. That is exactly what they do over there – the noalition. If Labor says something or government says something, it is, ‘No, no.’ They do not consider anything, because they do not have any plan. All they know how to do is say no and oppose everything always. That is what they do over there.
This record that I have just detailed for the chamber and for those playing along at home stands in stark contrast to the previous Liberal government, which strangled renewable energy investment. They were last in government some 19 years ago, right? So it just goes to show you the damage they did with their inactivity. Like I said, they like to occupy the office and do absolutely nothing with it or strangle the opportunity for anybody to do anything unless it involves them generating riches for their rich mates and it coming back to them.
As the share of renewables increases, there are new opportunities for energy storage solutions, and that is why our renewable energy targets are supported by Australia’s biggest energy storage targets: at least 2.6 gigawatts of energy storage capacity in Victoria by 2030 and 6.3 gigawatts by 2035. So you can see there is loads and loads of information and detail in our plan about how we are generating solar electricity but also increasing capacity and increasing storage capacity.
Tom McIntosh: They have no plan.
Sonja TERPSTRA: Exactly, Mr McIntosh. Those opposite have absolutely zero plan and no ideas about anything – no new ideas other than to say no and oppose everything always.
Tom McIntosh: His Majesty’s opposition.
Sonja TERPSTRA: That is right. They just like to talk to themselves. Let me just talk about the three broad categories of battery technology, because this is exciting. It goes to show how we are going to increase our battery storage technology. Again, those opposite have no idea about anything.
There are three broad categories of battery technology that are currently a focus for investment in Victoria. Our state is a leader in all of them because we know we are leading the way with this stuff and we want people to get on board with us. Some of the biggest big batteries we have in the pipeline are a 125-megawatt big battery with grid-forming inverters, which will be funded by $119 million from our Renewable Energy Zone Fund; a 100-megawatt battery with grid-forming inverters in Terang, supported through our Energy Innovation Fund; and four batteries totalling 365 megawatts as part of projects that were successful in the second Victorian renewable energy target, or VRET 2, auction.
There are also a growing number of big batteries being developed and operated by private sector market participants, because what we like to do is encourage private sector involvement and investment, including the 150-megawatt Hazelwood battery energy storage system which opened in June, which is very exciting – and I think, Mr McIntosh, you would know all about that – and the 350-megawatt big battery being developed by EnergyAustralia to support an orderly transition for the closure of the Yallourn coal-fired power station. The growing number of utility-scale batteries being developed and operated, with and without government funding, shows this technology is becoming increasingly attractive as an investment prospect, a trend that has been supported by our strong policy framework.
This is the point: if you have inactivity or uncertainty in the market, it will not attract investors. Victoria enacting all of these policy frameworks signals to the market and to investors that there is policy certainty and that investors can have certainty and feel secure and safe in the knowledge that if they want to invest in these sorts of things, they are going to be around for the longer term and the government is not going to change its policy or take a different track in where it is going with these sorts of things. Because the government has provided that certainty to the marketplace we do see additional interest from investors. They are all good things, and it goes to show that again there is more certainty being provided to the market, and that is what we want.
Victoria is a leader in neighbourhood-scale batteries, providing nearly $11 million via the neighbourhood battery initiative to explore the potential of this technology and to implement projects that benefit Victorian energy users. In stark contrast to Ms Lovell’s contribution, where she was saying we are going to make it harder for Victorians and it is going to be terrible and we are going to run out of electricity, I have just outlined the how of the plan, which is going to make it more beneficial to Victorian energy users.
And by bringing back the SEC – have I mentioned that before? Have I mentioned we are going to bring back the SEC before? I do not think I have mentioned it enough.
Ryan Batchelor: Mention it again, please.
Sonja TERPSTRA: We need to mention it again because that is how we are going to bring down energy prices, because it will be run by the government, and it means that Victorians will benefit from cheaper electricity prices. Under those opposite, when Kennett privatised everything, the private market got in, took all the money out and shipped it off overseas to their rich mates, so we know what happens if you lot ever get in government – you flog it off, and the profits go with it, mind you, overseas. And consumers pay. They have been paying ever since Kennett privatised electricity, and they have paid exorbitant electricity prices under those opposite.
I think I might leave my contribution there because I know Minister Stitt will be summing up momentarily and she will have loads of good things to say about this bill, which will also be of great interest to those who might be playing along at home this afternoon. I will conclude my contribution there and commend this bill to the house.
Ingrid STITT (Western Metropolitan – Minister for Early Childhood and Pre-Prep, Minister for Environment) (14:38): Thank you to all members for their very thoughtful contributions. In summary, I am going to try and just touch on a few key points and not repeat what others have already gone through. I can see that people are keen to get into the committee stage for this bill. It is a fairly simple bill and quite technical in nature. Despite some of the more colourful contributions, we really are dealing with a pretty simple and straightforward set of amendments.
The bill has three components, which are about increasing the reliability of our electricity network and improving customer protections. Of course as others have mentioned, the first adds decision-making criteria to Victorian legislation in the event that the minister for energy triggers the retailer reliability obligation; the second enables alignment between penalties applied in Victoria to the Victorian gas market participants with those in other jurisdictions; and the third change changes outdated references to the gas distribution system code, which is now known as the Gas Distribution System Code of Practice. So these amendments are very technical in nature, very specific, and they are about providing confidence to Victorians that energy markets are working in their favour.
If I can just touch briefly on the report that a number of speakers have gone to, the Electricity Statement of Opportunities, which was released today, the report tells us really what we already know: that climate change is driving more extreme heat and that will increase demand on our systems, and ageing coal-fired generators are becoming increasingly unreliable and we have to get on and build new renewable and storage capacity, and that is exactly what Victoria is doing.
For this summer the Australian Energy Market Operator have advised us that they have more than sufficient reserves to maintain reliability if many things go wrong at once – and it is, I think, important to keep that in context – primarily the failure of a coal generator on a hot day. In the longer term we have the plans and we have the projects in place to ensure that reliability is maintained, and this is acknowledged by AEMO in its report. If those opposite took the time to understand the report properly, they would not be being quite so animated about this and catastrophising about things, but we are kind of used to that. We have a massive pipeline of renewable energy projects, well over 100 projects that have been registered with AEMO, and that will ensure that Victoria continues to produce more than enough power well into the future.
In relation to prices, our record investment in renewables is having a downward pressure on prices. Recent price increases are entirely due to the unreliability of fossil fuels. Victorian wholesale prices have been the lowest in the national electricity market over the past year because of our higher share of renewables, but you would not know that listening to some of those opposite. If we listened to those opposite, we would be locked into the coal and gas industries for decades – the very cause of the higher prices.
I think finally, if I can summarise this in two short points, the bill makes very minor and technical amendments to existing legislation and these amendments ensure the proper functioning of our energy system and further protection for consumers against large energy companies, and that is the very nub of the bill that we are debating today. I commend the bill to the house.
Motion agreed to.
Read second time.
Committed.
Committee
Clause 1 (14:44)
David DAVIS: I flagged with the minister earlier one set of concerns. I have got fundamentally two sets of concerns, but the first set of concerns relates to the matters that were raised by the Scrutiny of Acts and Regulations Committee, and I have alerted her ahead of time to this matter. There are two points to this. The first is: has the minister responded formally to SARC, and if not, why not? If so, can we see a copy of that response? The second point that I would make – the substantive point – is that SARC does make commentary about the nature of this bill. I understand that this bill is part of a national set of legislation, but SARC does point to issues that relate to the delegation of legislative power and the so-called Henry VIII clauses. I wonder whether the minister will explain to the house whether, as I say, there has been a response to SARC’s set of points and, secondly, what the substantive response is to what is not ideal legislative practice.
Ingrid STITT: I can give you a little bit of information in response to the questions that you have kindly provided ahead of the committee stage. In relation to the questions around the Henry VIII clauses, the national gas regime is made up of the National Gas Law and the National Gas Rules (NGR) and provides the framework for economic regulation of gas distribution and supply in Australia. The NGL provides three tiers of civil penalty provisions, accompanied by civil penalty amounts for the purpose of the national gas regime. Tiers 1 and 2 – the higher penalties – only relate to provisions in regulations made under the NGL, and tier 3, which has the lowest penalties, applies to provisions not made under the NGL regulations.
The National Gas (Victoria) (Declared System Provisions) Regulations 2014 prescribed the Victorian-specific provisions of the NGR as civil penalties. Sorry, I am being a bit long winded about this, but I thought I could just step it out for you. The maximum civil penalties can be issued by the Australian Energy Regulator (AER) for non-compliance with Victorian-specific rules related to the declared wholesale gas market (DWGM) under the NGR. They are lower than in the other east coast wholesale gas markets.
In Victoria the AER can only access a default of tier 3 civil penalties for breaches of any provisions in the DWGM. This outcome has occurred following amendments to the civil penalty framework at the national level for both the electricity and gas markets made in late 2020. Due to the drafting of those provisions, the civil penalty framework did not include Victorian-specific provisions related to conduct in the gas wholesale market, which are prescribed under Victorian law.
Under the updated national civil penalties framework the AER can access civil penalties for any breach of provisions in other jurisdictions such as, but not limited to, tier 1, which is no more than $10 million for companies, and tier 2, which is penalties of no more than $1.435 million for companies.
In terms of the question around SARC – that is, the position that you were seeking from me before we came to committee – just one sec.
Mr Davis, I am advised that the minister has not yet received the formal correspondence from SARC, but if and when she does, she will be responding forthwith.
David DAVIS: I will follow up on the SARC end of that, but I understand this was tabled in the house – the minister presumably sees these too – at the start of August, so some time ago, and I would have thought that there would have been an opportunity for the minister to respond. But I certainly think the committee and the Parliament should have those responses as a matter of course.
On my second point, and it comes from the material seen today that the Australian Energy Market Operator has produced, what I seek from you, Minister, is a guarantee that we are going to see electricity supply this summer.
Ingrid STITT: As I indicated when I was summing up, this summer Australian Energy Market Operator (AEMO) has advised us that they have more than sufficient reserves to maintain reliability if many things go wrong at once – primarily the failure of a coal generator on a hot day. They have a role to play in being quite conservative in their outlook as to reliability, but we are very confident that, with the massive pipeline of new renewable energy projects – as I already indicated, well over a hundred of those have already been registered with AEMO – we will ensure that Victoria continues to produce more than enough power well into the future.
As you would be very well aware, you cannot predict every single scenario, and there have been, somewhat driven by climate change, I would argue, some extraordinary storm events in other parts of the country that have knocked out supply. Giving a blanket commitment in the terms you have sought is very difficult, but what I can indicate is that AEMO have been given that advice from the Victorian government about all of the projects that are in the pipeline and they have advised us that they have more than sufficient reserves to maintain reliability, and that is the key point to be made.
David DAVIS: The point I would make here is that we all understand the issues around climate change. That is a slow-moving point, and the government has had a long time to respond to that. The truth of the matter is that AEMO has downgraded the outlook and indicated that there is a greater risk than was there just six months ago.
Ingrid STITT: There are a number of reasons for that, though.
David DAVIS: They have outlined those reasons, but what I am asking you to do is to concede that there is a significant risk that there could be outages this summer.
Ingrid STITT: I am not going to be verballed on it. I have been pretty clear. What I will say is that today’s report does indicate that this is not an issue that is extraordinary to Victoria. The reliability outlook in Victoria is in fact consistent with the reliability outlook for the national energy market (NEM) for all jurisdictions. The change in the reliability forecast is driven by a number of factors, including higher forecast temperatures due to El Niño and climate change, which we know will drive up demand, no question about that, and less reliability of our ageing coal-fired generators. However, notwithstanding those facts, AEMO have advised that they think that there is sufficient reserve capacity available to ensure power supply. Our reserve capacity is five times what the potential gap will be this summer.
David DAVIS: The truth, again, is that AEMO has downgraded the position for Victoria and Victoria has the weakest position of all the jurisdictions. The minister has pointed to a number of factors: climate change and so forth. All of those are accepted as factors, but they were all predictable. The question I would ask is: does the minister and the government accept some responsibility for their failure to have us in a secure position and for the fact that our safety and security of supply has been downgraded?
Ingrid STITT: I think that is your take on the report, Mr Davis. I am not trying to be combative about this at all; I am trying to be helpful. What might be helpful is if I outline a few of the issues in terms of the long-term outlook that would not necessarily have been fully incorporated into the report that we are debating right now.
David Davis: On a point of order, Deputy President, I am very happy to talk about the long-term outlook, but my question was about the short-term outlook – immediately this summer. I will come to the other one in a moment.
The DEPUTY PRESIDENT: I am sorry, Mr Davis. I cannot direct the minister to answer the question that you asked. It is up to the minister to answer the way she sees fit.
Ingrid STITT: I will just take a minute to outline a few of the points in terms of the longer term outlook. As you would expect, the Electricity Statement of Opportunities is inherently conservative in its forecasts, and that is not unsurprising given the nature of their role. It only incorporates renewable energy in storage projects that are either under construction or have reached financial close. It does not include other projects that are in the pipeline, including the six projects under the second Victorian renewable energy target auction, which do total 623 megawatts of new renewable generation capacity and 365 megawatts of battery storage and more than 3500 megawatts of additional storage projects that have already been given planning approval are also not included in their outlook. There are, for example: Terang, with 100 megawatts; 225 megawatts which the government has funded through the Energy Innovation Fund; the Victorian Big Battery too, which is 600 megawatts; Golden Plains, which is 300 megawatts to 1200 megawatts; Mornington, which is 240 megawatts; and Melbourne renewable energy hub, which is 1200 megawatts. There is also the SEC’s pioneer investment, which is also expected to contribute to meeting Victoria’s reliability requirements in this period. And the Electricity Statement of Opportunities does not include the first Victorian capacity investment scheme auction, which was announced with the Commonwealth yesterday and will launch in October. There will be a further CIS auction, expected to be held in 2024. So in fact, Mr Davis, Victoria is a net exporter of energy, our exports have increased each year over the past four years, and we have built new capacity and we are exporting this excess capacity.
David DAVIS: I thank the minister for her commentary, but I would make the point that in the AEMO report it is clear that Victoria is in the weakest position both in the short term – the immediate term – and in the long term. That is quite clear from the graphs and charts that are presented in the AEMO report. But the point I would make about the immediate term, and that is this summer that I am talking about in the first instance, is that of all of those items that you have mentioned – the projects under construction, the approvals and so forth – the truth is, Minister, projects that are under construction or approvals that have been granted will not deliver energy in a blackout this summer, will they?
Ingrid STITT: I think we have kind of gone over this territory a couple of times already. The reality is that that is really outside the scope of what we are dealing with in this bill. You are making a number of assertions and political points, I would argue, about reliability. I am responding to that based on the information I have been provided about the pipeline of projects which will add to the reliability of Victoria’s supply. And indeed part of the bill that we are dealing with today is all about the retailer reliability obligation, which I would argue is an important step to take to give confidence to the Victorian community that these companies are on the ball and fully focused on making sure that electricity reliability is at the heart of everything they do.
David DAVIS: Just for the record, we are not opposing this bill. We are not against the provisions in this bill. Some of them have some merit, and I made that point earlier in the debate. But the truth of the matter is that these things will operate in the longer term and will not resolve the problem that Victoria may face this summer. You just seem to be resistant about giving a clear commitment about security of supply this summer. You might want to be quite clear about that. Will we be secure? Victorians, Victorian businesses and Victorian households – will they have secure electricity supplies this summer, or is there a significant risk that we could have outages?
Ingrid STITT: I believe this has been asked and answered. I have given the view of the government about the summer 2023–24 outlook, and I have also gone into some details about longer term outlooks for supply and reliability. So I have gone through that in quite some detail.
David DAVIS: Deputy President, I just want to reiterate that the minister has not been prepared to accept responsibility, or the government has not been prepared to accept responsibility, for any outages that occur this summer. I am just going to put that very clearly.
Ingrid Stitt: On a point of order, Deputy President, I am being verballed by Mr Davis, and I do not accept the assertion in his statement. I have been attempting to provide as much detail as I can about the government’s view in relation to a report that was tabled today, which, I might add, is not within the scope of the bill that we are debating and the subject of this committee process.
The DEPUTY PRESIDENT: I think you have clarified your point, Minister.
David DAVIS: Deputy President, the report today is squarely within the scope of this bill. It is precisely the matters that the report talks about that are being addressed by this bill. The bill is in part an attempt to provide greater security of supply and to provide additional energy supply into the future, as is the AEMO report, which lays out many of the points. I will just be very clear about that. This is precisely the terrain that this bill covers. I just want to repeat: the minister might step back and say, ‘No, no, this is not in the thing’, but just let the record record that the minister does not, on behalf of the government, accept responsibility for any blackouts or any problems that occur this summer.
Ingrid STITT: Well, I think, Mr Davis, you are being very disingenuous about what it is I have said and what I will repeat. For this summer AEMO has advised us that they have more than sufficient reserves to maintain reliability if many things go wrong all at once – so in a worst-case scenario sense, primarily the failure of a coal generator on a hot day. I have said that, I think, three or four times now. I understand what you are up to, but I have been very clear in my response in relation to those assertions.
The DEPUTY PRESIDENT: I think you have both made your positions quite clear, and we are actually getting into debate now, so Mr Davis, I draw you back to questions on the clause, please.
David DAVIS: I do think, Deputy President, that the position is quite clear and we have made the point, so we will move on. Returning very briefly with one further question on the SARC matters, I want to understand whether the government did look at any alternative ways of achieving its objectives beyond the way that it decided on in the end.
Ingrid STITT: Well, I will not attempt to repeat the very complex challenges that we were trying to deal with in the bill, but just let me go to the box for some advice about this specific question.
Mr Davis, one way that might have been pursued but was considered to be probably not the most efficient was through a national amendment, but that would have required all jurisdictions to be on board with that, and of course it would mean that we would be beholden to other people’s legislative programs. So that is why we have arrived at the mechanisms that we have, to be able to expedite making sure that our penalty arrangements line up with other jurisdictions in this way.
David DAVIS: I thank the minister for her response on this, and I understand the balance that has to be struck on some of these matters. I should just, perhaps for the record and without, necessarily, strong criticism of the government on this, make the point that there is a longer term debate I think that this chamber and this Parliament will need to have on some of these matters that interact with national arrangements. I am keen to see that our authority and control and ability to respond and to manage our own destiny is not diminished. I make the point it is not just in this jurisdiction that these issues are occurring, and it is not only in the context of national arrangements; it is actually some of these distant bodies that have got complex and hard-to-control administrative structures. Who is in charge of AEMO, the Australian Energy Market Operator, is a question. Increasingly my point would be that with bodies of this nature it is very hard for anyone to control them. Again, I am not making a specific point about the government here, I am making a more general point, and I will leave it at that.
Ingrid STITT: I think, given that we were keen to ensure that we were not hindering the AER’s enforcement role in Victoria, it was really about making sure that we could do it in a timely manner, given that we are talking about mitigating any consumer harm.
Clause agreed to; clauses 2 to 11 agreed to.
Reported to house without amendment.
That the report be now adopted.
Motion agreed to.
Report adopted.
Third reading
That the bill be now read a third time.
Motion agreed to.
Read third time.
The PRESIDENT: Pursuant to standing order 14.28, a message will be sent to the Assembly informing them that the Council have agreed to the bill without amendment.