In Parliament

Bill - National Energy Retail Law (Victoria) Bill 2024



Tuesday, 30 March 2024.

James NEWBURY (Brighton) (15:10):

I rise to speak on the National Energy Retail Law (Victoria) Bill 2024.

This Bill is about ensuring that Victorians have an energy provider if their provider goes under – ensuring that there will be an automatic transfer of customer in those circumstances.

It is a very, very simple Bill, and for that reason the Coalition will not be opposing it. But the Bill is about so much more than just simply ensuring that a customer has a provider. At the heart of the Bill, at the heart of this policy debate, is ensuring that all Victorians have access to reliable, secure, affordable and clean energy. This one Bill, although a simple Bill, is about ensuring that where an energy provider goes under, the Australian Energy Regulator will automatically transfer a customer to another provider.

Ensuring that Victorians have access to energy – have access to electricity – has been of great concern to Victorians, because we have seen so many Victorians left without reliable and secure access to energy. Many important organisations and independent thinkers have turned their minds to policies of energy and spent some time talking to the policies of energy.

I refer to the most recent report Keeping the Lights On from the Grattan Institute, which looked at a number of the underpinning policy issues at play in this bill, because this bill is about ensuring that people have access to energy. That is what this is about. That report, Keeping the Lights On, is about that very same thing. What that report found was that there is an uncoordinated approach to energy at a national level but also more broadly. It also found that the energy market:

… may not be able to deliver enough investment in low-emissions generation, storage, and transmission, when and where it will be needed.

That goes to the very core of what this Bill is about: ensuring that people do have access to energy and electricity. The report, which I will speak to in some detail, is significant, and it does go into quite important policy thinking around these matters. It was only released days ago, but it has provided an important policy contribution to these matters. I refer to the report:

Currently, the vast majority of power system outages occur because of problems with poles and wires, not lack of generation. But a reliability problem is emerging.

Before we go into the substance of the policy conversation it is important to note the report’s general observation that we have an uncoordinated approach, that we have power system outages which partly occur because of infrastructure and that reliability will be an emerging problem. As you delve further into the report and if you look at the statistics on what we have seen in terms of outages, you see an increase in that reliability problem emerging. If I can further quote from the report, it says:

As the Australian economy restructures to meet the challenges of climate change and net zero, it will rely even more on the electricity system. If this system fails, the country is in real trouble.

And what does that ‘real trouble’ look like? Well, 530,000 people in Victoria had no power at the last and biggest blackout that this state has ever seen, so there will be real problems. These are real problems. These are real policy challenges, and it is important to have a conversation about those policy challenges, not to be political about it but to understand that the experts are saying these challenges are going to get worse and need to be addressed. What the report recommends is:

… three priorities for planning this future market: a fit-for-purpose reliability framework, an emissions reduction policy for the energy sector beyond renewable electricity targets, and better integration of distributed energy resources. These must be accompanied by a major review of the governance structure.

Important findings – and things for us to think about as we consider what is a very, very simple Bill in a very complex conversation.

I spoke a moment ago about trends that have occurred, and I make a point that has been referred to in that report, at Page 10, which is that by the Reliability and Emergency Reserve Trader, between 1998 and 2016, backup supply was only procured on three occasions, in 2004–05 and 2005–06. But since 2017 there has been a striking change: backup resources have been procured and called upon in every financial year since 2017–18. It shows the trend. In 2021–22 this came at a cost of more than $125 million to energy consumers. We know there is a growing emergence of a problem, and that problem is about reliability. As we have a conversation today about the Bill – which the Coalition does not oppose – and ensuring that people have a switchover to a default provider, we do need to have a broader conversation about what these emerging trends are showing and the reliability concerns that are being pointed to that exist and the trends that are showing into the future.

I referred at some length to reliability, but I should also refer to the grid in some detail, because when we are talking about reliability we are not just talking about reliability of supply, we are also talking about the reliability and security of the infrastructure. We know that the Australian Energy Market Commission found that 95 per cent of blackouts in Victoria between 2009 and 2018 were caused by transmission and distribution failures, not the weather – 95 per cent. So there is an infrastructure problem – they are real issues. If I can refer to the Australian Energy Market Operator’s warning, it says:

To ensure Australian consumers continue to have access to reliable electricity … it’s critical that planned investments in transmission, generation and storage projects are urgently delivered.

We know there is a reliability problem. We also know from the experts that there is a trend, and we know from the market operator that we need urgent investment in transmission, generation and storage. We saw some of the reality of that play out in the AusNet report which was released around the time of the 530,000 Victorians being left without power, which found that one in seven of the 13,000 electricity transmission towers were damaged by patchy or extensive rust and about 8000 of them are now a decade or less from the end of their service life design. These are really concerning findings from an operator in the market, an operator who has conducted a report effectively into ensuring that we have secure and reliable electricity – findings that I am sure concern all of us. The report further found that 12 per cent of the towers were deemed to be in average condition, with patchy rust, and 1.5 per cent in poor condition that could pose a serious health and safety risk. So we know that there is a trend occurring in our supply, and we also know that our infrastructure is not secure, as we saw earlier this year with 530,000 people being affected and without power throughout storms. These are real concerns, so when we have a conversation about the Bill before us it is important, and that is why the coalition will not be opposing the proposition before us that consumers will have an almost default provider provided in circumstances where their provider goes under.

We need to have a broader conversation, because what is being proposed by the Government is not enough. The Government is not doing enough to ensure that we are protected from the broader issues of reliability and security concerns. Referring again to that 2020 assessment, it further found that 11 extreme wind events had knocked out 45 transmission towers since 1959, with a further six going down in the recent storm. But the pace is accelerating, and that is the point of the findings of this report. The pace is accelerating, with more than half of those towers – 25 – coming down in the past 15 years. What we are seeing from the Grattan report and what we are seeing from industry is a speeding up, if you like, of concerns around reliability and security, and what the Government is not doing is fixing those problems. What the Government is not doing is fixing those problems, and that is why you can see the Grattan Institute referring to an uncoordinated, ad hoc approach in terms of policy. In fact, the report effectively says that in many ways Governments are tripping over themselves and causing many of the problems we face. That is what the report says. It is not a direct quote, but if I can summarise it, it says that Governments are often the problem.

Security is important and security of supply is important, because at the end of the day this is not just about people having access to an air conditioner when it is hot; this is about people having access to electricity that may save their life, may keep them alive, may provide their family food, may provide energy to ensure that their businesses operate so they can provide for their families. When we have the conversation and these debates about security and supply, we do not clearly enough, at times, talk about the real impact. When you hear big numbers like 530,000 people without power, that does not go into the real stories of what happened that day and the days thereafter – the impact. I am sure that all Members in this place – I know I did – had people contact them who were desperately in need of power for life-saving reasons. Security and supply is not about making sure that someone has an air-conditioned home, it is about making sure they are safe, it is about making sure that their families are fed and it is about making sure their businesses are operating.

We have spoken about the experts, and we have spoken about industry in terms of operators. I should also refer to some of the industry more broadly. If I can refer to the Chief Executive, Paul Guerra, of the Victorian Chamber of Commerce and Industry, after that blackout he was quoted rightly as saying:

The fragility of our existing system was exposed. We can’t get to net zero on a hope and a prayer.

And further:

… the concern lies in how are we actually going to get there?

And further:

We cannot let energy security be the casualty of the transition to net zero.

He, as a representative of industry, was making the points that I made earlier, and making them on behalf of business, on behalf of industry, that we need a better plan to deal with the problems we face, more than just the policy plans that have been put forward by this Government.

When we talk about security one of the things that is often missed is the real impact of the cost increases of energy. A business certainly feels that, and I will get to some comments about that shortly. At the end of the day, we know the cost to the consumer, the cost to someone at home, is hurting them. It is really hurting them, the cost of energy. St Vincent de Paul recently found that there had been a 22 per cent increase in gas and a 28 per cent increase in electricity costs, which is roughly in line with the ABS finding of a 25 per cent increase in energy costs. These costs hurt. These numbers, which may sound cold, have an impact upon the people that can least afford it. We know that those costs also have an impact upon business in a very meaningful way, not just when the lights go out and the business is forced to close and throw out its goods but also upon its thoughts about continuing as a going concern in this state.

I have referred to it before, but the Chamber did a survey of Members in terms of costs, and it is worth repeating those findings. They found that energy policies were a top concern for two-thirds of Victorian businesses. That is an issue at the forefront for businesses operating in our state. Eighty-six per cent believed that the move to renewables would impact upon their output; 73 per cent said that the blackout earlier this year had forced them to close – three out of four forced to close, a significant hit on their capacity to trade and provide for their families; and finally, cost was cited 81 per cent of the time as a main barrier to switching from gas to electricity.

Although I will not go into too much detail on gas, we have in this place talked a lot about gas and Labor’s pernicious gas ban. We cannot allow as a state this government to ban gas. We know that a supply of gas should be provided to ensure security of energy to Victorians. By banning gas, Labor is effectively undermining that security. What is interesting is what the minister is saying to gas producers when the door is closed. That is what is interesting. What the minister says in public and what the Minister is now starting to say in private are two very, very different things.

A member: That’s not true.

James NEWBURY: That is true, and that is coming from the industry themselves. They will start standing up and calling that out. They will start calling out what the Minister is saying behind closed doors. If I can refer to a comment from Mr Guerra on gas, where he said:

Specifically on gas, if we don’t have a clear plan which also includes affordable pricing, and if we get out of step with the other states in Australia by becoming more expensive for energy, that increases the operational risk for business.

We saw only a couple of months ago ABS figures which showed a net decrease of 7606 businesses in Victoria. Anecdotally, not just by the numbers, when you talk to business, business talks about leaving the state. Tim Piper, a Director from Ai Group, said, and he is right, that:

Some (companies) are able to stay here, (but) it is the continuing reinvestment that is the real problem …

That is the message that business gives you when you talk to them. There are businesses that are operating. But it is the reinvestment, and you can see reinvestment decisions are now being made interstate. You can see businesses considering what they will do in the future, and they are talking about South Australia and they are talking about Queensland regularly. It is a very common conversation to talk to businesses and for them to say that. Further, Mr Piper said:

… I know some big companies that are saying this is beyond the pale, they’re not going to be able to pay the level of gas prices especially, and they are having to reconsider their positions –

in this state. These are very important points.

We see it more broadly in policy more generally. We saw it with wind generation, and hasn’t wind generation been a real concern for Victorians? We have seen the Federal Government state that there will be no meaningful wind generation, in its view, until the late 2030s. But the Government has a legislated target in Victoria for well before then. This Parliament passed it. In good faith we had a conversation in this Chamber and that Bill was passed because we want energy generation to succeed. We want it to succeed. We want people to have reliable, secure and affordable energy. But we saw with wind a complete collapse of wind policy, and it is for a number of reasons that these policy areas have failed – one, because of poor policy work. Poor policy work has been a key issue in that, when you look at states like New South Wales, there has been an incredible lag in this state on policy in energy and working with industry to ensure it. We are years behind other states here. I recall speaking early in this Chamber, five years ago, about that very fact and looking at New South Wales. The Victorian Government has now started to, in recent parliamentary weeks, implement some of the measures that were passed in New South Wales, to bring those in with VicGrid most recently in the last sitting week.

The Government proudly boasted in Bill briefings how they modelled themselves on the New South Wales model – some seven years behind New South Wales before we have even got off the ground, so we are going to be the best part of 10 years behind. That is not something to be proud of, because what that means is we have a reliability and security and affordability problem with energy. That is the problem.

There is a policy concern, but there is also a lack of community buy-in. We saw that with the government modelling with their public report – a need for 70 per cent of agricultural land to be covered by renewables to meet targets. That report was removed from the Government’s website. People in regional communities were deeply concerned that the Minister had released a report – and I have a copy here with the Minister’s coloured photo – announcing that up to 70 per cent of agricultural land would be required to reach renewable energy targets, without any consultation with the communities. And then when the media wrote about the report, they pulled the report, hiding it, not stating otherwise but hiding it. You can understand why communities look at that and believe there is a lack of trust. You can see more recently, with decisions made by the Premier and the Minister for Planning around bypassing communities on any renewable project, why
communities are upset, and what we will sadly see is communities become more and more upset by the government’s approach.

You cannot walk into a community and override that community, because communities at the end of the day have built themselves around people who have been there since the community was formed, who have been part of the community groups, who have built the houses. Governments cannot walk into those communities and say, ‘We’re not going to ask you what we’re going to do.
We don’t care what you think. We’re going to build what we want.’ It is just wrong. You can see it with renewable energy; you can see it with planning more generally. I mean, the planning system is heading down a dark path where communities have no say over their own streets or towns – none at all.

I was recently at a community meeting in Meredith where a wind farm has been proposed, and some 400 people turned up to talk about the project a kilometre away from an airport, an airport that has served the community for some 30 years and is a point for emergency services to land and use. And the community has said, ‘We’re open to having a conversation about this project, but can you give us some guarantees around what this will mean about the capacity for emergency services to provide the services they have been providing?’ They have not had an answer. So is it any wonder that 400 people turn up to say, ‘We’re not asking for much. All we’re asking for is the courtesy of a conversation, not simply being ignored.’ We will see with wind, we will see with renewables and we will see with offshore wind – we will see communities, we will see councils starting to say, ‘Enough.’ That is what we will see over the coming year. Either the Government are going to learn that lesson before they make the change or they are going to learn that lesson the hard way as the year goes on, because community trust is important, and the Government do not have an ounce of it. So the Government has failed on that measure.

When it comes to energy, we must have reliable, secure, affordable and clean energy, and some of the big policy conversations we need to have are being ignored. And though we will not oppose this Bill, because it does something, it does not do enough in terms of fixing the big challenges we face and the big policy challenges that this state faces into the future.