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SA won't be at the mercy of a national energy market or large power companies: SA Premier Jay Weatherill -

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SABRA LANE: South Australia's Premier Jay Weatherill's defended his energy plan, arguing it's essential because the National Energy Market is broken.

He joined me a short time ago.

Jay Weatherill, thank you very much for talking to AM.

JAY WEATHERILL: Pleasure.

SABRA LANE: Where are you going to get the gas to supply this new government-built plant?

JAY WEATHERILL: Well, our expert advice is that there is sufficient gas to meet the needs for this gas plant.

In a relative sense, the generation of electricity for this particular plant will not need very much gas, and there's ample supplies.

But in the longer term, our plan also actually provides incentives to extract more gas and we do that in a range of ways.

First, we co-invest with the exploration companies through putting in our own grant funding to unlock new gas reserves.

There are ample gas reserves in South Australia. When we unlock that gas, we essentially hypothecate a proportion of that for domestic use.

Secondly, we also incentivise land owners to participate in that by giving them a share of royalties. So 10 per cent of the royalties that are generated through gas production will go to the landowner, and that's an Australian first.

SABRA LANE: Why not wait until the chief scientist's final report on energy mid-year?

JAY WEATHERILL: We can't afford to wait.

This is a broken national electricity market. We're already seeing price spikes going through the roof, unreliability of supply.

We know that Hazelwood is closing within weeks.

This is a real national energy crisis, and we have a Federal Government that simply is handing around lumps of coal in Federal Parliament, which is no substitute for action.

SABRA LANE: To be clear, are you withdrawing from the national energy market?

JAY WEATHERILL: No, of course not. What we're doing is making the national energy market work for South Australia.

We're not going to put ourselves at the mercy of the eastern states.

SABRA LANE: If you're going to give yourself the power to override the market, you're effectively sidelining all the other states.

JAY WEATHERILL: No, we're not.

On February the 8th we had the absurd situation where we had a national energy market operator that chose to black out South Australians rather than turn on a power plant that was sitting there, ready and available to be used. Now…

SABRA LANE: But this is the energy market regulator that Mr Koutsantonis praised September last year, saying, "We built it. It served us well."

JAY WEATHERILL: In the context of the national blackout, it responded in the way in which it should have - to protect the whole of the network so we could get the network back up, so his remarks were directed at that context.

But let's explain to the power of direction that we've put in.

Remember, when the blackout did occur, we, the opening gambit for Mr Frydenberg is that we should have used our emergency power, so he acknowledges that the existing national energy market provides us with emergency powers to intervene.

What we're simply doing is instead of having to declare a national emergency, we're going to invoke those powers much more simply and effectively to give the Energy Minister the capacity to protect South Australians.

We're not putting ourselves at the mercy of a national market that does not pay attention to South Australian needs, and we're certainly not going to put ourselves at the mercy of large power companies which are gouging prices.

SABRA LANE: Well, just on those two points, you've been critical of the energy market operator and the private companies.

Does there need to be an overarching powerful energy watchdog to police the agencies and the private companies?

JAY WEATHERILL: No. What there needs to be is a national energy market that effectively operates.

I mean, we've been calling for reform for 10 years.

And the reform is obvious - it's a price on carbon.

You can call it whatever you like - the emissions intensity scheme, a low emissions target.

It's a price on carbon that sends the appropriate investment signals.

We've had nine coal-fired power stations leave the National Electricity Market. We've had 5,000…

SABRA LANE: And some would argue it's the Renewable Energy Target and the fast track to renewables that has forced those companies out of the market.

JAY WEATHERILL: No, it's not.

What it is, is the lack of the price on carbon.

Everybody knows that there is a price on carbon coming, it's just that we haven't been able to, on a national sense, been able to achieve that, and in the absence of that very clear investment signal, you've seen underinvestment.

The reason why Hazelwood is closing in a few weeks is it needs $400 million worth of investment. And no self-respecting…

SABRA LANE: It's an ageing, sorry, it's an ageing plant that's reached the end of its life.

JAY WEATHERILL: No, it could have been extended if it had $400 million of investment.

But who is going to invest, make a long term investment in the future unless they understand the rules of the game?

So, what we have here is the reduction in competitive forces, which is destabilising the system, reducing competition, driving up prices.

It is a broken National Electricity Market and the reason it's broken is because the obvious policy response is being destroyed by a bunch of right-wingers in the Federal Parliament who love coal and hate renewables.

And that's what you're seeing again with the response to this plan.

The Prime Minister's out there bagging our plan, and he's doing that because he's continuing his attack on renewable energy.

SABRA LANE: Premier, South Australians, South Australians who AM have spoken to are highly sceptical that your Government is up to the job and can actually deliver the plan that you've outlined.

JAY WEATHERILL: Well, you're speaking to the wrong South Australians.

I mean, this is a plan that delivers a secure and certain future for our energy system, more affordable energy and greener energy.

And it is the only cogent national plan on the table.

And instead of the Prime Minister and the Energy Minister nationally bagging this plan, let's see them respond to each element of it - the world's large... the nation's largest battery, indeed some say the world's largest battery, a state-owned gas power plant, local powers over our national market, a further generator brought on by using our bulk purchasing power, gas incentives and an energy security target to ensure that South Australian power is used for South Australians first.

That is a cogent plan. It's been welcomed across industry, across the South Australian sector, and what we have from the opposition, both at a state and a federal level, is simply more glib blame-shifting.

SABRA LANE: Premier, thanks for your time this morning.

JAY WEATHERILL: Pleasure. Thanks Sabra.

SABRA LANE: The Premier of South Australia Jay Weatherill.