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Bill Shorten demands gas market transparency to tackle ‘energy crisis’

The Guardian/19 September 2017

Labor will step up pressure on the Turnbull government to increase transparency in the gas market to help manufacturers facing rising prices and tight supply, ahead of a public intervention by Australia’s competition watchdog on energy.

With the chairman of the Australian Competition and Consumer Commission, Rod Sims, due to address the National Press Club on Wednesday on the issue of electricity and gas affordability, Bill Shorten will call on the government to accelerate gas market transparency reform.

The Labor leader says the Australian Energy Market Operator should be given “teeth” by fast-tracking reforms designed to help give Australian manufacturers a head start in gas contract negotiations.

“This is a crisis happening right now – Australian manufacturers need action on it right now, not in five years’ time,” the Labor leader said in a statement. “The energy crisis we’re facing right now is bigger than one power plant – it’s a national problem that demands a national solution.”

Shorten has also renewed Labor’s complaint that the government is yet to pull the trigger on its proposed export controls to keep more gas onshore.

Sims has previously raised concerns about the ability of pipeline operators to exercise market power when negotiating the price of transportation services and the chief scientist, Alan Finkel, has also called for the Australian Energy Market Operator to be given more visibility on gas contracts to help it manage looming shortages.

With manufacturers complaining that they are unable to secure affordable long-term gas contracts, federal and state energy ministers have also established a gas market reform group to improve transparency, reform the wholesale gas market and create a new arbitration framework for pipelines that are not regulated under national laws.

In the lead-up to Wednesday’s press club speech, Sims has raised concerns about the anti-competitive effects of vertical integration in the Australian power industry, which he says are increasing power costs for consumers.

The ACCC chairman has noted that AGL’s acquisition of two New South Wales coal plants, including the ageing Liddell power station, which has been at the centre of the Turnbull government’s energy policy deliberations, had led to “about 85% of generation capacity being in three hands and those same hands have got about 85% of the retail market”.

Sims has characterised AGL’s takeover of Liddell as an “anti-competitive acquisition”.

With AGL intent on resisting pressure from the Turnbull government to either sell the Liddell plant, or extend its operating life for five years beyond 2022, when it is due to close, the company took journalists on a tour of the ageing facility on Tuesday.

Company representatives said the cost of keeping the plant open for an extra decade could be more than $900m.

The ACCC chairman will give the Turnbull government two reports on electricity and gas late this week, which will play into the Turnbull government’s ultimate resolution of its energy policy.

Late on Tuesday, Labor’s climate and energy spokesman, Mark Butler, continued to extend an olive branch to the government on energy policy.

With the former prime minister Tony Abbott running a public campaign against subsidies for renewable energy in an effort to get Malcolm Turnbull to abandon the clean energy target recommended by the chief scientist, Butler noted that, by 2020, solar and wind would be able to be able to “stand on its own two feet” in a well designed energy market.

He said Labor would also do everything it could to secure bipartisan agreement on a post-2020 energy policy if the prime minister was “able to get something out of the Coalition party room”.

 

News Source: The Guardian

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