9 August 2019
GERALDINE DOOGUE: The long term future of the Liddell Power Station in the New South Wales Hunter Valley is once again far from certain with the New South Wales Government joining a Federal taskforce looking at both short- and long-term options for the aging coal plant. Liddell has been in operation since 1973 and its now Australia's largest electricity generator. Last week, after considerable public and private pressure from the Federal Government, AGL said it would delay the planned closure of the plant by four months to April 2023. Angus Taylor is the Minister for Energy and Emissions Reductions and he's in our Parliament House studio. Welcome back to Breakfast Minister.
ANGUS TAYLOR: Thanks for having me Geraldine.
GERALDINE DOOGUE: You want this taskforce to come up with a plan to avoid a repeat of Hazelwood, the close down in Victoria, and you have three years until Liddell closes. Now, what answers do you need?
ANGUS TAYLOR: We don't want to see a repeat of Hazelwood, you're exactly right, because what we saw down there was premature closure of that generator without a plan for how Victoria could keep the prices down and keep the lights on. We saw 200,000 households and businesses lose their power last summer in Victoria because of a shortage of generation. So we don't want to see a repeat of that exactly as you say. Now, I'm not going to front run the conclusions of this review - it needs to have all options on the table. Obviously one option is like-for-like replacement, and when I say like-for-like it’s got to be affordable, reliable power that can drive prices down and keep the lights on in New South Wales. The other option, which AGL has already to some extent gone down is some extension of the life of Liddell - there's all sorts of shades of grey in between those options and all sorts of variance. As I say, the job of this taskforce is to sort this out as quickly as possible. Whilst it’s almost four years away it takes a long while to plan these things and the problem we saw with Hazelwood is that planning work simply wasn't done.
GERALDINE DOOGUE: What? None? I mean - was there nothing? It’s hard to believe.
ANGUS TAYLOR: Well, that's what it looks like Geraldine in the sense that we saw a more than doubling of wholesale prices under certain circumstances down there when Liddell was withdrawn from the market-
GERALDINE DOOGUE: Hazelwood you mean?
ANGUS TAYLOR: Hazelwood, sorry, was withdrawn from the market and that had an enormous impact. We also saw the reliability impacts last summer and we need to make sure that we don't have a repeat of that with Liddell. This is crucial work, the taskforce will be both Commonwealth Government, State Government and of course AGL, and customers. I mean the customers here are very, very important in this.
GERALDINE DOOGUE: Well, the significance of New South Wales coming on board - that's the question I want to ask you, also, AGL itself, and what customers?
ANGUS TAYLOR: Look, there's many customers. I mean AGL or Liddell in particular is a very large generator in New South Wales. So we all rely on it when we flick the switch in New South Wales to varying degrees, and there's very big industrial customers as well.
GERALDINE DOOGUE: But are they actually going to be part of the taskforce, are they?
ANGUS TAYLOR: We'll be engaging with them very closely - we need to. They are crucial here because jobs depend on affordable reliable power. There's many jobs across, particularly regional New South Wales, where affordable, reliable power is a prerequisite to them being able to continue on. There's many trade exposed industries, they export or they compete with the imports. If they don't have access to the electricity prices they need, and the reliability they need, they go to another country and we can't afford to have that happen.
GERALDINE DOOGUE: Because in some ways four years doesn't sound very long to me given what you're describing. Just what is at stake here? I mean if they, if you find that there isn't sufficient dispatchable power by 2023 - which isn't really that far away - what are the options then?
ANGUS TAYLOR: As I say, we'll work across the full range of options which go from extension of life, or partial extension of life, through to replacement.
GERALDINE DOOGUE: Which, what, you could force, could you?
ANGUS TAYLOR: We'll work through all the options. I don't want to front run the conclusions of this taskforce, it's a very important piece of work. The point I make to you is if you get yourself into a situation like Victoria did with Hazelwood where months away you see this thing about to close and you don't have a plan, it can be a disaster for your electricity market and it really was down there. It's had an enduring impact not just in Victoria but in other states on the affordability of electricity, and the reliability of electricity. We're just not going to get ourselves into that situation. I was delighted to see AGL's announcement last week that they're extending the life of Liddell and Torrens A which is a big gas fired power station in South Australia which is really crucial to the east coast market as well. These are import announcements that they say that AGL wants to be part of a solution here not the problem, which is good news. We're looking forward to working with them, and the New South Wales Government, and other stakeholders to get a solution to this problem as quickly as possible.
GERALDINE DOOGUE: See AGL initially promised to replace Liddell with 1,600 megawatts of renewables and 250 megawatts of battery storage. Do you say that the company has delivered on that pledge? Have you seen anything that you consider a rock solid commitment?
ANGUS TAYLOR: Any replacement option must be like-for-like. That means if you're replacing it with solar and wind, there's got to be a solution to what happens when the wind doesn't blow and the sun doesn't shine.
GERALDINE DOOGUE: So that's dispatchable power you're really talking about.
ANGUS TAYLOR: Yeah. I mean, on the worst possible day you've got to have the power there for customers so that when they flick the switch the lights go on, and that means you have to have enough dispatchable power in the system. So it's got to be like-for-like both in terms of reliability and affordability and that's what we'll be working through on the taskforce.
GERALDINE DOOGUE: It is interesting that at the same, during the same week this is announced the Australian Energy Regulator, the AER is taking legal action against four wind farms, including one owned by AGL over the 2016 blackout in South Australia, which of course is much bigger than that when you're talking about in Hazelwood. The AER is seeking to impose penalties through federal court action. AGL says it does not accept the AER's conclusions and will strongly defend these proceedings. That was 800,000 people left without power. One might ask why aren't the fossil fuel generators also a focus of this legal action?
ANGUS TAYLOR: Well the legal actions being taken by the AER, Geraldine. This is a matter for them, they do that work independently. All generators have to meet their performance requirements. Intermittent generators, solar and wind, need to be there when we, or to have the backup and storage necessary for that worst possible day. These are important requirements built into our rules now. We brought forward the retailer reliability obligation in December last year which went into place from 2 July. That means that years ahead of time, retailers have got to have the dispatchable power in place they need to meet their customers' needs. These are major and important reforms and it's the job of the AER to enforce those rules.
GERALDINE DOOGUE: So this is the responsibility for reliability or whatever it's the obligations for reliability that has come in?
ANGUS TAYLOR: Yes, exactly right.
GERALDINE DOOGUE: Look, what if you discover in this taskforce that we really haven't got enough to go forward, are you suggesting new coal or gas fired plants will be needed to replace Liddell? Would you start to emphasize energy efficiency? I know you're very keen on that, still has huge potential, but it's not exactly grabbed the public spotlight.
ANGUS TAYLOR: Yeah, energy efficiency is important, there's no doubt about that, Geraldine, and we'll continue to drive energy efficiency in this country. We're doing actually a very, very good job of this. All the small businesses and large businesses out there, and households, doing extraordinary work to become more efficient and they're choosing to do that mostly of their own volition which is absolutely fantastic. But look, I don't want to front run the conclusions of this taskforce. It is very important work. All options need to be on the table. They will be. We've got the right people sitting down and working this through. We've got a very collaborative state government in New South Wales. We've got AGL working closely with us, and we saw that with their announcement last week on the extension of those, the life of those two very important power stations. I'm looking forward to working this through as quickly as possible. There is some urgency to this getting to- to the outcomes and implementing them as quickly as possible.
GERALDINE DOOGUE: Where does AGL sit, I'll ask you again, in these negotiations? If the company refuses to further extend the life of Liddell beyond April 23 2023, is there a big stick you can use that will force them to do that?
ANGUS TAYLOR: I know you want me to give you the answer of the taskforce now but I can't do that, I'm not going to do that. I'm not going to speculate on the outcomes. We need to work our way through this, AGL is being very collaborative. They've made some very important and positive announcements in the last week. New South Wales Government is working very well with us and is enthusiastic about this taskforce. We'll work our way through it, Geraldine, and I'm sure I'll be back on this program talking about it in the future.
GERALDINE DOOGUE: Yes, I'm sure you will. Will we have a report? Like how much will the public be drawn into this?
ANGUS TAYLOR: Obviously, we're going to have to explain to the public what comes out of this and what we're going to do, of course we will. The public is an enormously important stakeholder in the outcomes of this because they depend on reliable affordable power not just to keep their household bills down and to keep the lights on at home and in the small businesses but for jobs. So we'll continue to engage very closely with the public through the course of this taskforce.
GERALDINE DOOGUE: Alright. Well thank you very much for joining us Minister.
ANGUS TAYLOR: Thanks for having me Geraldine.