Ignoring the rules risks poor energy outcomes for Victorians

Energy market participants are alarmed by reports that the Victorian Government intends to go-it-alone on transmission developments, despite the real risk of increased costs for end users as a result of poor investment decisions.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said that no industry consultation had been undertaken on the proposed Bill, nor had it been sighted.

“There is already a robust investment test for transmission in the energy sector, run by the Australian Energy Regulator (AER), which serves energy customers well. Bypassing that rigorous process is fraught. Every transmission and network investment will unavoidably affect market investments, so careful and individual assessments carried out at arm’s length from politics are necessary.

“This is critical to ensure not just the timing, but also the cost-effectiveness for customers who have to pay for new links, as well as providing a predictable framework for generation investors,” Ms McNamara said.

“The Australian Energy Market Operator’s (AEMO) 20-year integrated system plan released late last year highlighted a sensible, phased implementation approach for transmission infrastructure, which the industry broadly supports.

“Major investments like interconnectors can play an important role in maintaining security of supply, but commitments to them should only occur as a result of a rigorous cost-benefit analysis overseen by the AER under a national planning approach.

"The kind of state-based intervention proposed by the Victorian Government will likely create instability for would-be investors in the energy market,” Ms McNamara said.

About the Australian Energy Council

The Council represents 23 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Media contact             Carl Kitchen                0401 691 342