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Electricity supply shortages

Hansard: 6 June 2007 ASSEMBLY

Electricity: supply

Mr CLARK (Box Hill) — I raise with the Minister for Energy and Resources the large increases in electricity bills being experienced by many Victorian businesses and the forecast shortages in reserve capacity for this coming summer. I ask the minister to develop and make public a plan to ensure that Victoria does not suffer an electricity crisis in the same way it is suffering a water crisis and a metropolitan public transport crisis.

In particular I ask the minister to include in this plan a commitment that the Victorian government will fully cooperate with the commonwealth government in the implementation of a national emissions trading scheme and a commitment to take strong action in future against union militancy of the sort which has dogged Victorian power plant projects in recent years and which is deterring future projects.

In recent days the media has reported numerous instances of businesses, particularly small businesses, receiving notices of massive increases in their power bills. Yesterday I spoke to the proprietor of a bakery business in Craigieburn who contacted me after being notified of electricity price increases that are set to raise his annual power bill by around 50 per cent, from about $24 000 to about $36 000. It has been reported that the average price of electricity in Victoria has risen from $32.47 per megawatt hour in 2005-06 to $46. 97 per megawatt hour so far in 2006-07, and even higher in recent times.
National Electricity Market Management Company forecasts are already showing that Victoria is facing a reserve shortfall of between 200 and 300 megawatts in several weeks of this coming summer, and that is not even factoring in the effects if rainfall remains below the long-term average.

Just recently Origin Energy announced it was deferring its proposed gas-fired plant at Mortlake, about which the government has long been boasting, in favour of a gas project in Queensland. The construction of gas-fired power plants in Victoria has suffered badly from union militancy under the Bracks government, with the AGL Somerton plant, which was originally scheduled to open by the end of 2001, in fact not being officially opened until 2003. Industrial action has also added more than a year to the construction of the Laverton North power plant.

The minister has tried to blame the drought, but it is clear that that is only part of the problem. The failure of the states to agree amongst themselves on the introduction of an emissions trading scheme, despite their clear constitutional responsibility to do so, has meant it has been left to the commonwealth to act. In the meantime that has created regulatory uncertainty for potential power plant investors.

The minister has also tried to defend the government’s expensive and inefficient Victorian renewable energy target scheme and has criticised the commonwealth’s task force report for recommending against technology-specific regulatory schemes.

However, exactly the same approach is recommended by the state and territory governments’ own National Emissions Trading Taskforce discussion paper of August 2006, which says that one of the great strengths of an emissions trading scheme is that it is technology neutral, it allows the market to seek out the lowest cost ways of achieving any particular emissions cap and it does not rely on omniscient governments directing investments and abatement activities through the more traditional command-and-control regulation or through industry or technology-specific subsidies. It is clear that the minister has a responsibility, and he needs to act.