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Thursday, 1 November 2012
Page: 8784


Senator MILNE (TasmaniaLeader of the Australian Greens) (13:20): I rise today to speak to affirm my support for this very important Senate Select Committee on Electricity Prices report looking at the National Electricity Market and trying to find ways to bring power bills down. I think it is unfortunate that the coalition have failed to take the opportunity to actually talk about National Electricity Market reform and to focus on carbon pricing, because the whole committee report is dedicated to finding ways to bring power bills down. In the committee process there was a good attitude by all committee members about looking at ways by which we could facilitate consumers paying lower bills, and that is what this is all about. But, in my view, it is also about making sure we get the transformation of the whole electricity generation system in Australia to be much closer to zero carbon emissions and 100 per cent renewable energy. How this all came about was in the Multi-Party Climate Change Committee. As we worked through getting the Clean Energy Finance Corporation and $10 billion for renewables and energy efficiency, it became obvious to me that one of the big problems is that you could facilitate the development of renewable energy, you could get the money for it, and so on, but the National Electricity Market operation acts against the best interests of the community in bringing prices down and getting the community engaged in distributed systems.

Two recommendations of the Multi-Party Climate Change Committee were really important, and they were underreported at the time. One was that AEMO, the Australian Energy Market Operator, be charged with doing scenario planning for 100 per cent renewable energy. That work is underway at the moment. They are doing two scenarios, for 2030 and 2050. We also had a recommendation that the Commonwealth government would lead the states in the COAG process for national electricity market reform.

Since the Clean Energy Legislative Package, I have been talking to the government about moving on electricity market reform. I put up a Senate inquiry proposal in June. Eventually the government agreed to have a Senate inquiry under the terms of reference as agreed, and this is the result. I have to say that it addresses one of the concerns that people have—that is, the current rules are pushing tens of billions of investment into building more poles and wires, driving higher energy sales at the expense of both consumers and the environment. Forty billion dollars has already been allocated to new poles and wires from 2010 to 2015, even as electricity demand is falling, leading to what Professor Garnaut said is the highest rate of electricity bill rise in our history and in the OECD, and, unless there is root and branch reform, this will continue. The report has been timed to influence the government in the way it negotiates with the states at the COAG meeting that is coming up later in the year.

Reforming the electricity market rules should direct billions of dollars into investment. Rather than fuelling growth in energy and pollution, we should be building a smarter grid, with cheaper and cleaner alternatives, energy efficiency, demand management and renewables. That demand management, energy efficiency and renewables combination need to be addressed.

Importantly, the recommendations in the report move to establish a standard connection, fair pricing and a licensing regime for distributed energy. This is really important. One of the things holding it back has been that people say, 'I would really like to generate this renewable energy,' or 'I would really like to aggregate these energy demand measures and bid those into the market,' but there are no rules that facilitate that in a reasonable way and at a reasonable price. Furthermore, they can be delayed forever. There is no protocol around time frames for connection. So the connection is really important. That is an important reform and I am glad that we have managed to get it in there.

Also, we need to improve the regulatory processes and introduce measures to decouple network revenue from energy consumption. At the moment, you get more money the more energy is consumed. We need to decouple that because we do not want more energy to be consumed, so we need the energy networks and the retailers to develop a new business model that is not based on fuelling growth but rather delivering energy services. That is really important. There was agreement across the committee that this is a really good thing to do. We also wanted to establish AEMO as a whole electricity-market-wide planning agency that would be independent of state governments and networks so that it can develop national standards and assess demand-side options on a level playing field against building poles and wires to meet network constraints.

The Greens would have liked the reforms to have gone further. One of the things we really wanted to see was the incorporation of an environmental objective in the National Electricity Market. You would need to put that in the legislation. Currently, all the electricity market has to do is provide a secure supply of energy and it is meant to be at a fair price, but there is nothing to say that the secure supply and fair price needs to be consistent with our national objective to reduce our greenhouse gas emissions or be consistent with our obligations under the UNFCCC.

Firstly, one of the key ways in which you could change the mentality about how the electricity market operates is if it were forced to operate with an objective that said that part of its focus is to reduce emissions, consistent with our national strategies. That is not in there. I would have liked to have seen that, but the government and the coalition could not go that far at the time. I am pleased to see that there is a recommendation that it be considered, consistent with what the UK has done, where it has worked fairly effectively.

Secondly, the Greens have argued that we should have a national energy saving target and a national energy savings initiative to drive step change in energy productivity so as to lower electricity bills and greenhouse gas emissions. We need a national energy savings target. The Greens have said that we should be aiming for three per cent. We are prepared to negotiate, of course, and talk to people about what it should be. But, if you had a national energy efficiency target, then the whole system has to be geared towards reducing demand, and that will only happen if you decouple the volume or the consumption of electricity from the money that is generated, otherwise you have a built-in resistance to reducing demand. It is essential we get that.

Thirdly, the Greens think that there should be a feasibility study undertaken into a minimum peak demand reduction target for the networks. In other words, they would be told that they have to meet a target to reduce their peak demand. That means they would go out and talk to consumers, businesses and so on about how they can meet their peak demand reduction. As it is, 40 hours of the year is taking 25 per cent of the $40 billion of investment in poles and wires. That does not make sense. If you gave them a peak reduction target, they would have to reduce at peak times.

This morning on Radio National there was a story about a fuel cell company who is leaving Australia and going overseas. Why? They said it is because there is no certainty in the Australian market. I blame the coalition for that in large part because they have not given business the certainty that there is a commitment across the parliament to genuinely reduce emissions and bring about reform. They also went on to say that they are leaving because there is no real commitment to energy efficiency across the whole system. If we had brought in a target for reduction of peak demand, that would play absolutely into the commercialisation of that technology around fuel cells that would enable you in your home to log on to your computer and negotiate to reduce demand at a household or an industry level. It is another company leaving the country on top of ending the commercialisation of solar technology at the University of New South Wales the other day. Every day is an opportunity cost until we get the NEM reform that enables the manufacturing of new technologies, new jobs and new innovation in Australia but, more particularly, the reduction of people's power bills. I believe that everybody in this parliament would want to see a reduction in power bills. It can be done. We are bringing down wholesale prices by rolling out renewable energy. We now need the electricity market reform that will facilitate the bringing on of the renewables and the aggregation of people who want to save on energy—bringing about all that energy and excitement in the Australian economy through reducing emissions. (Time expired)