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Thursday, 12 December 2002
Page: 8070


Senator ALLISON (2:27 AM) —I move Democrat amendment (2) on sheet 2660 revised:

(2) Schedule 1, page 34 (after line 14), after item 151, insert:

151A After subsection 161(1)

Insert:

(1A) Where an accredited hydro-electric power station with a nameplate rating in excess of 20 MW has access to major water storage capability, the regulations must provide that a 1997 eligible renewable power baseline for such a station is its long run average generation capacity.

Note 1: Long run average generation capacity is determined with reference to the average generation that the power station could have produced from its annually available water, if it had used the water to generate electricity in the year that the water was available rather than store the water for generation in subsequent years.

Note 2: Major water storage capability can be defined where the storage cycle has historically extended beyond a year. That is, water can be stored long-term and used in subsequent years to produce electricity.

This amendment seeks to change the way the baselines are set. I can read the mood of the Senate and I can understand that neither the government nor the ALP will support this, but I will explain what it attempts to do. I will also correct Senator Barnett. This measure is supposed to reward investment in renewable energy, not to pay for subsequent investment in renewable energy. There is a subtle distinction between those two. In fact, Hydro Tasmania may choose to do so, but they are not obliged to spend any of the money they get for these renewable energy certificates, which are for no extra investment at all, on new investment. They say they are doing that and that is very nice, but there is no obligation on them to do that under this bill.

This amendment changes the way the baselines are set for large-scale hydro-electric power generators. Currently, baselines for generation are based on an average of annual generation for the 10 years prior to 1 January 1997 and for four years after that date, so that is 14 years. However, the problem is that some pre-existing large-scale hydrogenerators are demand-constrained systems. That means that determining baselines in the way they are currently determined gives the generators the capacity to create renewable energy certificates for no additional investment in new generation, because the baselines are simply too low and are not an accurate reflection of the current generation capacity. The fairer way to determine baselines for these hydrogenerators is to look at what they could have produced over a designated period rather than what they actually end up generating.

Our amendment requires that, where an accredited hydro-electric power station with a nameplate rating in excess of 20 megawatts has access to major water storage capability, the regulations must provide that a 1997 eligible renewable power baseline for such a station is its long-run average generation capacity. In other words, it is not the actual generation but the amount of water stored which can generate the electricity. The long-run average generation capacity is determined with reference to the average generation that the power station could have produced from its annually available water if it has used the water to generate electricity in the year that the water was available rather than store the water for generation in subsequent years. In other words, it takes away that whole question of being able to manipulate the production of generation to meet demand. That is the problem with the baseline as it is currently set. Hydro Tasmania only generates what it needs. It could generate a great deal more because it has the water capacity there to do so. So that keeps the baseline down to an artificially low level, which is why we have this problem.