4 December, 2018
Helping Businesses Cut their Power Bills and Emissions with Smart Energy
SMART ENERGY SUMMIT, DOLTONE HOUSE, SYDNEY
I am pleased to speak at this conference, the theme of which is Helping Businesses Cut their Power Bills and Emissions with Smart Energy.
Our new leader, Michael Daley and his Deputy, Penny Sharpe, are true believers and strong advocates for renewable energy. Like me, both believe increased renewable energy is the path to both stabilising and reducing electricity prices and controlling greenhouse gas emissions in our energy sector.
Michael Daley mentioned renewable energy as the path to affordable electricity in his first press conference after becoming leader. You can read this as a clear indication of our policy direction.
I am Labor’s Leader in the upper house and Shadow Minister for Energy. Michael Daley has added the portfolio of Climate Change to Energy – a clear and powerful signal, not only of the importance of meeting the challenges of Climate Change but also the clear link it has with energy and decarbonising first our energy system and then the wider economy.
It shows that my party understands the need for the transition to a clean and cheaper energy future.
While I won’t be announcing any new policy this afternoon, there are some principles that will drive Labor’s energy policy as we approach the election next March which are useful for you to understand.
NSW Labor’s energy policy will have three aspects:-
- Cutting electricity bills by re-regulating the retail energy market, saving average households and small businesses around 24 per cent off their electricity bills;
- Securing a reliable and affordable energy supply for homes and businesses by driving energy productivity and efficiency while ensuring there is enough investment in new, largely renewable, generation capacity that more than offsets the retirement of our ageing fleet of coal-fired power stations; and
- Ensuring a fair and clean energy transition from a fossil-fuel based economy to a decarbonised economy – one that is powered largely by clean and renewable energy. This aspect is concerned with ensuring that economically vulnerable persons and communities are not left behind.
The Berejiklian Government does not have an energy policy. Its internal contradictions and conflicts on this matter mirror the Federal Coalition. As Minister Harwin’s contribution this morning makes clear, the Berejiklian Government takes every opportunity to avoid addressing the more fundamental questions of an electricity sector now in crisis. A crisis it helped create through privatisation and deregulation but has no answers for.
The Berejiklian Government has no plan to address the big three challenges of electricity policy – affordability, reliability and lower emissions. Having hid behind the NEG discussion federally, they have no way forward now the Federal Government has abandoned any pretense of rational policy.
This government has failed to address the cost of living challenge of spiraling prices. On the current NSW government’s watch, electricity prices have increased by an average 60%, including 20% since Gladys Berejikian became Premier.
It has sat on its hands while other States and Territories around the country have acted to facilitate the transition to renewable energy. The Climate Council’s recently released report, Powering Progress provides a scoreboard of the State and Territories’ renewable energy penetration. If we pull out hydro, NSW comes third last with 6% of our electricity generation powered by wind and solar. Only Queensland and the Northern Territory have a smaller percentage of wind and solar power than NSW.
This is not only bad for our climate, it is a wasted opportunity for NSW. We should be benefitting from the positives the industry can deliver – as you know, jobs and economic activity in regional areas are exactly what State governments should be working for.
A Daley NSW Labor Government will do this.
Our policy will be built on those three imperatives – improving affordability, ensuring reliability and delivering a rapid transition to clean generation. Happily, the task of saving the planet and reducing people’s power bills are now converging.
Deregulation of the retail electricity market by the NSW Liberal National Government in 2014 saw increases of up to 15% within months by the big three electricity retailers (AGL, Origin and Energy Australia) – charging as much as triple the rate for power in regulated markets. Work done by the ACCC has shown that the retail profits alone of the electricity companies is at least ten percent of your bill. Most businesses are flat out having margins of 4-5 per cent. When you consider those same companies also own most of the generators that make the electricity, the proportion of our electricity bills they take in profit is much higher.
Last year, NSW Labor announced it would re-regulate the retail electricity market by making sure discounts being offered to consumers are real discounts off what they are actually paying, and ensuring that products are able to be understood and easily compared with each other. A fair priced default offer for those consumers unable to engage with a very confusing market, to ensure they no longer pay what has been called a ‘loyalty tax’ was a key element of our policy.
Since then the ACCC has endorsed the approach we have been campaigning for, as has the National Farmers Federation, the NSW Farmers Association, the Canegrowers Association of NSW, as well as ACOSS and NCOSS.
The ACCC has costed the savings of its plan as being electricity bill reductions of 24 per cent for the average household, with similar savings expected to be able to be achieved for small businesses. We will work closely with the ACCC to ensure the implementation of these reforms deliver real cost savings to consumers in NSW.
The key difference between the ACCC proposals and NSW Labor’s plan is our policy to limit the level of profits able to be made by the big energy companies. A Daley NSW Labor Government will develop and implement a legislative mechanism to oversight the level of profit being made by the big vertically integrated energy companies and to ensure that excessive profits are returned to consumers. I note this is supported by recommendations 1 and 9 of a recent inquiry by the Legislative Council into electricity supply, demand and prices in NSW.
Of all the ways privatisation of the electricity market has failed consumers, this is the most stark. Labor will not allow the lack of a truly competitive market to undermine outcomes for consumers any longer.
The second key way to stabilise electricity prices is to increase generation and supply. A lack of adequate supply in NSW – delivered by years of policy paralysis at the Federal level and a lack of leadership at here in NSW – keeps wholesale prices high by the simple laws of supply and demand. This dynamic will become even more pressing as more than half of NSW’s current (coal-fired) electricity supply is due for retirement over the next decade and a half.
NSW Labor knows we will not be building any new coal fired powered generation in NSW. The economics and the environmental imperatives preclude it. No serious body is proposing one. I have spoken to a number of key financial institutions, none of whom have any plans to finance one, should they be asked. Talk by State and Federal Governments about being technologically neutral or technology agnostic is really code for not being able to tell the truth to themselves or the community: that the future of our energy system is renewables. By holding out a theoretical hope that there may be a place for new coal-fired power, our current governments are stalling on the transition we all know is needed. I can tell you today that a Daley Labor Government will proceed on the basis there will be no new coal-fired power stations built in NSW.
NSW Labor supports the Federal Labor target of 50% renewables by 2030. I think we should be saying at least 50 per cent by 2030. If technology and economics permit, we should move further, faster. We also support the objectives of cutting emissions by 45 per cent on 2005 levels across the economy and achieving net zero emissions by 2050. This will cut 88 million tonnes of carbon emissions from the electricity sector alone and have wholesale electricity prices around 25 per cent lower than they would be under the Turnbull Government’s NEG. I note the comments from the current NSW Energy Minister on this matter earlier. All I can politely say about this is that in eight years the present NSW Government has failed to take action on this front, or to even finalise its plan for net zero emissions. It’s hard to take anything they say in this space seriously.
We are also committed to ensuring the new supply is reliable by supporting building appropriate levels of storage – including batteries and pumped hydro. Whether Snowy 2.0 gets off the ground, will of course impact the scale and design of our build of storage technologies within NSW from here to 2030.
Legislated targets would go a long way to providing the signals the market needs to ensure there is adequate investment and that renewable energy projects are delivered in the timeframes we need. That is how California has achieved the level of renewable energy it has today. First it has a 20 per cent target. Then, a 33 per cent target. Then 50 per cent, and now it is aiming for 100 per cent. It did not happen by itself, but because policy makers set a clear roadmap. On a recent trip to California earlier this year, industry representatives informed me that clear and legislated targets gave them the certainty they needed to invest and build. Industry sources here in NSW have given me similar feedback. This is a conversation we need to have here in NSW.
We are also looking closely at ‘reverse auctions’ as used by Queensland, Victoria and ACT and believe underwriting prices for new generation can be a cost effective way for government to ensure increased renewable energy supply. This approach can also be used effectively to underwrite storage. Using mechanisms like this will not only help grow renewables here in NSW but also make sure we do not continue to miss out on the significant economic benefits and opportunities for jobs that come with this kind of investment.
At the NSW Labor Party conference last year, it was resolved that NSW Labor would establish a publicly owned Energy Corporation to complement private investment and to increase competition in renewable energy supply and storage. This would act to increase renewable energy deployment, underwrite new technologies and ensure consumers are better protected from gaming of the system. This is another measure under consideration.
In recent times, the current NSW Government has said that congestion in our transmission system means that there is now a limited capacity to connect new renewable energy generation projects to our grid. It is used almost as an excuse for its inaction in taking any steps itself to increase the supply of new, renewable energy for our State. One wonders what they have been doing for the last eight years.
NSW Labor supports in principle the Integrated System Plan produced by the Australian Energy Market Operator. We understand that targeted investment in transmission capacity can reduce the investment otherwise needed in new generation assets. This will also ensure that the least-cost electricity in the NEM will be accessible as needed to consumers, keeping downward pressure on prices. It will also assist the orderly transition of Australia’s evolving power system to a low emissions, low carbon future. In some areas, transmission improvements are necessary if we are to get the benefit of new energy generation assets, such as the proposed Snowy Hydro 2.0.
A NSW Labor Government will work with regulators and industry to identify and deliver those investments in the power grid that can best unlock the value of existing and new resources in the system, at the lowest cost, while also delivering energy reliably to consumers.
The NSW Government is obviously a big buyer of electricity in its own right. Shifting to renewable energy for government energy needs is another way of increasing renewable energy supply in the system which we are seriously considering. I note that the State Government currently only has 6 per cent of its electricity coming from renewable sources. The current energy supply contracts expire in 2020. Moving to a much higher proportion of renewables in its own energy usage is a strong step a NSW Government can, and should, take.
Finally, Labor takes very seriously the issue of demand management and is looking at pathways to assist consumers – both households and businesses – to improve energy efficiency while also investigating ways to encourage industry players to facilitate better demand management. The cheapest and easiest way to keep prices down and reduce emissions is to use less power, if we can.
A number of the ideas I have canvassed here today are also supported by a recent inquiry by the Legislative Council into electricity supply, demand and prices in NSW an inquiry I was a member of. It’s worth a read.
Before the election, NSW Labor will release a full suite of energy policies. We are acutely aware of the need to protect vulnerable households in this process and to ensure low income households are not excluded from the renewables revolution.
We are committed to ensuring that the communities impacted by the shift to clean technologies are supported. Labor believes in a just transition. And we are committed to supporting innovation across the sector as decentralised power, facilitated by the new technologies provides us with the chance to reimagine the system to improve outcomes for consumers everywhere.