December 12, 2016




MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Thanks very much for coming out this morning, I want to address a couple of important reports that have been released about Australia’s electricity system.


The first is a report from the Energy Market Operator (AEMO), which has recommended substantial investment to provide better interconnection between the different states in the electricity market; including South Australia and Victoria importantly, but also a second Bass Link between Tasmania and Victoria, and better interconnection between the three large states on the Eastern Seaboard. We’ve known now for a couple of decades that better interconnection between the major states of the National Electricity Market is very important for electricity consumers. It provides a much more reliable network but it also improves competition within the states, which drives down power prices for households and for businesses. Now AEMO says that even after the substantial investment that would be required over coming years to provide that better interconnection there is a net benefit of $300 million to consumers of providing that better interconnection including, a second interconnector between South Australia and New South Wales.


The second report I briefly wanted to address, was a report of a speech to be delivered by the Chair of the Market Operator AEMO. In that speech the Chair of AEMO confirms the blackout that occurred in September in South Australia was to use his words, “a truly technology neutral blackout.” That confirms the advice from a range of experts that the bringing down of transmission lines, 23 towers by the massive storm that happened that day in September would have caused a whole range of generation to trip out as well. Indeed, the AEMO Chair in his speech that is reported this morning refers to a number of other instances where there have been blackouts in the past since 2000 that have been caused by gas-fired or coal-fired generators tripping.


Now in relation to these reports the Environment and Energy Minister Josh Frydenberg has already been out today with the usual slogans we now hear from the Government. In relation to better interconnection the Energy Minister has said it has nothing to do with the Commonwealth Government whether or not there is a more reliable, more affordable electricity network for Australian consumers. In spite of the fact there is a strong history of the Commonwealth Government, going back to the Keating Government; supporting better interconnection Josh Frydenberg has said the Turnbull Government has no interest in it. It really is ironic given that it has only been in the last week that the Turnbull Government has confirmed they will be slinging $1 billion to the Adani Coal Mine to build a private railway line for the benefit of a multibillion dollar, multinational, coal company from India.


We also have heard the usual slogans over the course of this morning that this has something to do with renewable energy deployment across the different states. We know from the last week’s events that there is one single large threat to the reliability and affordability of our electricity network at the moment and that is Malcolm Turnbull’s refusal to sit down with Labor and implement a bipartisan scheme for our electricity network. It was a scheme recommended by Dr Alan Finkel, the Chief Scientist, to the COAG meeting on Friday, supported by all of the State Governments, Liberal and Labor alike, supported by the Energy Markets Commission, supported by the CSIRO (the people who brought you WIFI) and by the Energy Industry itself.


Malcolm Turnbull’s refusal to stand up to the ideologues within his own party, Tony Abbott, Cory Bernadi and others is according to the Markets Commission going to cost households and businesses in this country $15 billion in higher power prices.


JOURNALIST: Those power prices may still be high even if you opt for the recommendations to add new interconnectors through the Australian borders, so there is a cost to be borne in any event. Who pays it?


BUTLER: These ideas have to go through a proper regulatory process. Electranet here in South Australia is already undertaking consultation in accordance with the legislation to look at the possibility of a second interconnector either to Victoria or to New South Wales. There is obviously still a long way to go in making these decisions. But what we do know is that after the costs of those investments are made, the improvements in affordability, because you get better competition, you get better reliability, according to the Market Operator in the report they released this morning provide a net benefit. Not a net cost, a net benefit to consumers of about $300 million.


JOURNALIST: Josh Frydenberg is of the view that the AEMO report is driving up the cost, through renewable energy and putting energy security at risk. What do you think of that interpretation?


BUTLER: Well again Mr Frydenberg is not listening to the experts. This has been a reoccurring theme on electricity policy from this Government. They listen to Tony Abbott, they listen to Cory Bernadi, and they don’t listen to the experts. The Market Operator has said better interconnection is a no-brainer in the future of Australia’s electricity system. To provide a more reliable network and it will provide lower prices. Better competition, particularly important to a state like South Australia, which is at the end of the network. We know for example that the Liberal State Government, the Olsen State Government’s disastrous privatisation experiment with our Electricity Trust meant that they trashed the decision to build a second interconnector to New South Wales many years ago. Now if we had that second interconnector, we would have a much more competitive market here in South Australia that would be driving down power prices.


JOURNALIST: If there were a bipartisan approach at the Federal level which you’ve commended to the Prime Minister and his Government. Is it still going to be a hard sell to the states if they have to cough up?


BUTLER: Look the interconnector ideas have a long way to go as I said there is a range of hurdles for the Transmission Network Operators to jump through to show this is a good idea and what sort of investment needs to be made. Also State Governments and the Commonwealth Government need to consider what level of support, if any they’ll give to these ideas. This is really the beginning of a process that I think the Market Operator has outlined today. What was an important opportunity for bipartisanship in the energy sector was the Emissions Intensity Scheme, recommended by all of those bodies I referred to earlier, going to COAG on Friday. The only player that is holding out is the Commonwealth Government. This is a model Malcolm Turnbull supported back in 2009, advised by Danny Price. The only reason he is holding out is because he is too weak to stand up to the right-wingers in his own party like Cory Bernadi and Tony Abbott and this weakness is going to cost consumers $15 billion.


JOURNALIST: There’s been a welter of reports on what happened to South Australia in late September, do you think there is any consensus in those reports on the underpinning of the cause of what lead to that blackout and has it cleared the air in terms of the cause or is there still a myth being reported about the reasons it (the blackout) happened?


BUTLER: I think everyone is clear that the dominant cause was this massive storm that blew down 23 towers and brought down transmission lines. In a network that is essentially a long thin line like South Australia’s that is always going to cause enormous damage. There is still I think a lot of work to do; we’ve seen reports this morning to work out the mechanisms on some of the generators about how and when they trip out, and how many times they are about to ride through these events. But that’s work that I think the Industry and the Market Operator are undertaking in a sober, constructive way. What we don’t need though is lectures from people like Barnaby Joyce to give us the benefit of his very shallow insights into electrical engineering about whether this had anything to do with the deployment of renewable energy. The AEMO Chair has affirmed again this morning this was a “truly technology neutral blackout” to the use the Chair of our Market Operators words.


Thanks very much everyone.