Turnbull government’s export restriction package tackles power prices

Turnbull government’s export restriction package tackles power prices
The Federal government has announced measures to try and lower energy prices by restricting gas exports.

The gas export restrictions are aimed at forcing exporters to divert production into the domestic market, preventing local prices soaring above amounts paid for ­Australian gas in Asia. The Prime Minister Malcolm Turnbull flagged enacting Constitutional powers to force gas exporters to redirect supply to the domestic market. The new regulations to restrict exports will start from January 1, 2018.

Mr Turnbull also said the government was open to the idea of using clean coal technology to replace  existing generators.

“I’ve said in the past that I think that, as Australia is the lar­gest seaborne exporter of coal, it would be good if we had a state-of-the-art, clean-coal power station in Australia,” Mr Turnbull said.

“But that’s not to say that the federal government should be building it or would be building it.”

The package also includes abolishing the limited merits review appeals mechanism which has forced up power prices by an estimated $6.5 billion. The limited merits review systems allows decisions of the Australian Energy Regulator to be reviewed by the Australian Competition Tribunal. This has seen 52 appeals by power companies and courts ruling against consumers 31 times.

The package also provides an extra $67.4 million for the Australian Energy Regulator to stop energy companies gaming the system and to overturn rulings in court.

The Australian Energy Market Operator will conduct a review to look at new dispatchable, base-load power.

A meeting of the Coalition party room adopted 49 of the 50 recommendations by Chief Scientist Alan Finkel. The most contentious one, a clean energy target, was not adopted following a revolt in the party room last week. However, Energy Minister Josh Frydenberg said it was still under consideration and would continue to be analysed in consultation with stakeholders.

The Minerals Council of Australia has been lobbying Coalition MPs to have reverse auctions replacing dispatchable baseload power capacity that is lost as old coal-fired generators close. This includes the loss of about 3600 megawatts of base-load coal-fired power from the Hazelwood plant in Victoria, and the scheduled 2022 closure of the Liddell plant in NSW.

With the reverse auction system, gas companies could put forward plans to fill the gap left by the closure of ageing coal generators, allowing the government to choose between clean coal, gas or other options meeting a benchmark for reliability.

Mr Turnbull stressed however that this did not mean the Coalition was closing the door on a longer term clean energy target.

 



Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.


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