Press conference, Sydney Commonwealth Parliament Offices

Interviewer
Press conference
Subject
East coast energy markets
E&OE

CHRIS BOWEN: The situation remains tight but also remains under very active management. Last night, as you know, New South Wales, Victoria and South Australia exceeded the price cap and entered an administrating price situation, as Queensland had roughly 24 hours before.  

Yesterday there were concerns about load shedding and the situation in Queensland. Through very active management by AEMO, that situation was avoided. I've been in regular contact with AEMO today who also advised me that they are confident the situation can be and will be avoided in New South Wales and Victoria in particular in coming days.  

Of course when there's a price cap in place it does have certain ramifications as important as it is. It has required AEMO to direct generators to bid into the market to provide the energy system with electricity. Just as they did in Queensland, AEMO has done the same for Queensland again today, 2,000 megawatts in round figures, and 1,500 megawatts for New South Wales. AEMO has advised me that the current supply for Victoria and South Australia is satisfactory for their purposes.  

Importantly, any further unexpected outages, any closures of coal firepower stations which come unexpected will have obviously ramifications in a very tight market. But there is enough supply in the system to avoid load shedding. Asking the big industrial users to reduce their energy use, or indeed I've seen some public speculation blackouts. There is enough supply in the system to avoid those for the foreseeable future, subject of course, as I said, to any unexpected further outages.  

Australians can have confidence that their regulators and the market operator are world class, have the confidence of the government and can have their confidence as they manage this situation. I do not believe it is a likely outcome at this point that there will be any requirement for load shedding, or indeed as I said for blackouts.  

It is important that the Regulator works very closely with the state jurisdictions, as they are, as I am, I was in regular contact yesterday, for example, with Minister de Brenni in Queensland managing the situation cooperatively, together as joint partners, the Commonwealth and the States working together to manage this situation. That's certainly the case in all the affected jurisdictions and will continue to be the case.  

Happy to answer any questions.  

JOURNALIST: You say load shedding is unlikely but are you having discussions, [indistinct] discussions with large energy users they may have to assist in that?  

CHRIS BOWEN: AEMO does that as a matter of course, yes.  

JOURNALIST: Is the Government having those    

CHRIS BOWEN: AEMO is doing that on our behalf. That is the appropriate place for it to happen.  

JOURNALIST: Can you give us more details about those discussions?  

CHRIS BOWEN: AEMO as a matter of course would be talking to the very big industrial users about the situation, asking them what preparations they can and will put in place. I don't expect it to be necessary but prudent management would indicate that it is, should occur and it is occurring.  

JOURNALIST: You said that there's no concerns at this stage about load shedding and blackouts for the coming days. Is this a problem that we can expect throughout winter?  

CHRIS BOWEN: Look, I said this morning that we should expect, I think I used the term “it's a bumpy winter”. This is a particularly cold winter, as I think we all know, as somebody that's held press conferences in the park at 6 o'clock in the morning the last couple of mornings, this particularly cold winter. That's having an impact. Obviously we've had both expected and unexpected coal firepower station outages. We've had floods in coal mines, for example. This has put pressure on the system, as has the geopolitical situation.  

The administrative pricing will continue until the price comes down, and that will provide some challenges for AEMO, but AEMO is up to those challenges. AEMO working with us, working with the States, has avoided any load shedding to this point and I have confidence they'll be able to continue to do that subject to any further unexpected outages.  

JOURNALIST: When prices were capped yesterday some generators withdrew from the market and AEMO intervened and said [indistinct]. How much did that cost AEMO and where did that money come from?  

CHRIS BOWEN: So that then, it doesn't cost AEMO anything in the short term. What then happens is that there's a situation where anybody who's directed to generate can bid or request compensation, and it's a process that then gets worked through with AEMO, the States and the Australian Energy Regulator. So we're not yet at that situation.  

JOURNALIST: [Indistinct] eventually. Does it allow these retailers to game the system?  

CHRIS BOWEN: In relation to gaming the system, the Australian Energy Regulator I can tell you wrote to the generators this morning reminding them of their obligations under the law for fair bidding, for accurate bidding and reminding them of the ramifications if they don't, and informing them, as they should expect, that the Australian Energy Regulator is and will continue to monitor their behaviour very closely and carefully. So again, the Australian Energy Regulator is on the job. I've spoken to the Regulator today, Clare Savage, she takes this very, very seriously, as should generators.  

JOURNALIST: You said this morning that the Government doesn't have legislative basis to undertake short term measures to deal with this energy crisis. Do you expect that in this term of government you will be able to bring in the legislation required to be able to    

CHRIS BOWEN: To be fair that comment was in relation to one specific suggestion, one specific question in relation to former Prime Minister Turnbull's suggestion of a 90-day intervention in the gas market.  There's simply not a legislative basis to do that at the moment, which was the simple point I was making. The Government does have legislative basis for action to be taken and it has been taken. The gas supply mechanism was triggered last   now almost two weeks ago, for example. So there are things that can be done.  

As you know, I met with the state and territory ministers last Wednesday night, we agreed on other actions which require rule changes which are being implemented.  That's also happening.  

In relation to the particular question about legislative basis for intervention, the gas market, I made that point.  I also make the point that the trigger is not fit for purpose for this eventuality, the so called trigger, the Australian domestic gas security mechanism.  It is a very blunt instrument.  The members of the Opposition who have called for us to pull the trigger in response to the situation simply don't know what they're talking about.  We have said, Madeleine King and I announced in this room last week that we would look at reforming the trigger.  We said that all things are on the table, but where particularly Madeleine is the Minister responsible for the trigger under the law has some consultation to work those issues through.  

One thing this Government won't do is engage in knee jerk ad hoc reactions.  That's what the last government did.  

JOURNALIST: How long do you expect AEMO will continue with the cap for? Is it possible beyond 4 am tomorrow?  

CHRIS BOWEN: Well how long the cap is in place   the cap's in place.  That's the rule, so it's the law of the land.  

JOURNALIST: For how long?  

CHRIS BOWEN: The cap is in place. The question is with respect not how long will AEMO keep the cap in place, it's how long will the prices stay above the cap. That's the question.  I'm not trying to correct you, but that's the better way of framing the question. The market will determine that.  If bidders, I remind bidders, generators, they have obligations under the law for fair and accurate bids and that should reflect their costs.  But again, I'm not going to predict when the cap ceases to be operative because that's something for the market to play out.  

JOURNALIST: Just on the legislative, will you consider any legislative overhaul of that mechanism to have it as a future short term option?  

CHRIS BOWEN: You mean the gas trigger?  

JOURNALIST: Yes.  

CHRIS BOWEN: All things in relation to the gas trigger are on the table, yes.  

JOURNALIST: How much longer do you expect AEMO to direct generators in the market to improve electricity reserves?  

CHRIS BOWEN: I think that's basically frankly the same question as the last one because they'll have to do that for as long as it's capped    

As long as the cap's operative I would expect AEMO to continue to require generators to bid in.  

JOURNALIST: What is your message to Australians who are being asked to conserve energy while the east coast deals with this very cold start to winter, what are they supposed to be doing?  

CHRIS BOWEN: Well as I said this morning, nobody should turn off any power usage that they need, that they're using for their comfort or their safety. Nobody should do that. Nobody's asking for that to happen. There has been a general request to say anything which is surplus. Now I'd expect most of the things that would have been turned off already because power bills have been high. So swimming pool filters and swimming pool heaters and outside lighting which is not necessary at any particular time.  That sort of thing is a general request for people to be aware that the market is tight and if that could be turned off that would be useful.  But nobody should turn off any heating or anything which they are using or is necessary.  

JOURNALIST: What about something like Vivid, people who are wondering why you've got a light show on while there's an energy crisis, what do you say about that?  

CHRIS BOWEN: Well, I mean I think that's probably coming to an end soon, isn't it, anyway? It's been   I'm not quite sure of the dates but I know it's been going for a little while.  I'm not here particularly to comment on Vivid or the actions. It's an important event in Sydney's calendar. Many people have made plans to see it for however long it runs.  I'm not here to provide any commentary on that. It's a general comment that anything which is superfluous, isn't necessary, think about switching it off.  

JOURNALIST: Are you concerned there could be a shortage of domestic coal once Europe turns off Russian coal?  

CHRIS BOWEN: Well, I mean I think that's one of the issues that's played out is the geopolitical situation.  As I've said from the beginning it's one of the issues which is playing into this situation.  Coal companies who want a demand for their product, both internationally and domestically.  Will that continue to play out?  Yes.  

JOURNALIST: And should there then be a coal reservation policy [indistinct]?  

CHRIS BOWEN: Well there's no law enabling us to do that at the moment.  

JOURNALIST: Is it something you would consider?  

CHRIS BOWEN: Look, I mean I don't think we're at that level. I don't think we're at that level of consideration. I think obviously if there's an issue which needs to be addressed the Government has shown that we will consider addressing it, but I'm not pre empting or flagging any particular action in that regard today.

Okay, all right.  

JOURNALIST:  Thank you for that, appreciate it.  

CHRIS BOWEN:  Thank you, cheers. 

ENDS