Interview with Leon Byner, 5AA Adelaide
2 April 2020
Subject: Energy prices
LEON BYNER: Federal Minister for Energy Angus Taylor. Angus, thanks for coming on and explaining this today.
ANGUS TAYLOR: Thanks for having me, Leon.
LEON BYNER: Now, these changes, first of all, let's walk through the first lot about the energy giants promising to wipe expensive electricity and gas bill charges - what does that actually mean when people get their bill?
ANGUS TAYLOR: So there's two parts to this. One is hardship provisions, which is someone who's struggling to pay their bills - they will be extended to people who have been, and businesses as well, that have been impacted by the virus. And it means three things. One is they won't have to pay fees and charges, interest charges. Secondly, they can't be disconnected. And third, the debt collectors won't be sent around. So, what it effectively means is if you're on a hardship plan or you're facing financial hardship, you can't be thrown off the network. Now, the point I’d make about this is those of us who can pay our bills should continue to do so. It's very important we keep things turning over and this is not an excuse to not pay your bill if you're capable of doing it. But clearly, there are people out there who are in a tough position. The other part of this though is what we're calling the hibernation provision. So if you're a small business - a pub for instance, you've had to shut - what this allows you to do is to hibernate your business without paying energy bills through that time period. And both the big retailers and the network companies, the poles and wires companies, have come to the table and said: ‘Yes, we're going to make sure that hibernation is possible’. The network companies have set a threshold of your energy is down to less than 15 per cent of what you would normally purchase. So you've essentially shut your business but you might still have a couple of computers running or a fridge running or something. But essentially, it allows you to hibernate your business without energy costs. And the crucial thing we're trying to achieve here - we're trying to achieve this on the employee side too of course with the wage subsidies we announced earlier this week - is to allow a business to be hibernated and to come back out the other side without drowning in debt and drowning in costs, which would mean that they just can't keep the business going on the other side of this. So these are very good steps forward. We still all have a responsibility to do the right thing if we can. That's very important, Leon. But I think these are very important concessions from the energy companies. We’ve been working them through over recent weeks. They know that their reputations haven't always been as good as they perhaps could be, and I think this is a very positive step from them to do the right thing by our community.
LEON BYNER: Okay. I'll get your clarification on this, where we understand that families in financial stress and receiving government support payments will also receive network charge rebates if they pay for electricity or gas through smaller retailers. So, for the average consumer, what does that mean?
ANGUS TAYLOR: It just means if you are facing genuine financial hardship, then you won't have to pay those network charges. I mean, it's as simple as that. Now, it's not to say that when you're in a position to pay them, you won't have to pay them in the future. This is not the end of energy bills as such. But it does mean if you're in hardship, the companies are going to do the right thing and make sure that you're not having to stump up, and that's, as I say, a very good step forward.
LEON BYNER: So when does this apply from?
ANGUS TAYLOR: This applies from now and it will apply from the network companies through to the end of June. The retailers have committed too, which is what really counts actually, through to the end of July. But obviously, that's the initial time period. Let's see where we stand at the end of this. Look, there's no view here that if this continues on then this kind of concession will all disappear, but that's the initial time period and I think that's, as I say, a very good step forward. And it means those who are really struggling will be looked after, whilst those of us who can pay should continue to do so.
LEON BYNER: Alright. I've got another point here that is a problem that's been there for a while, and I know it's been exacerbated by what's happened and that is this - Senator Rex Patrick has got some data from AEMO - that's the Australian Energy Market Operator - and they've had to intervene in the market 122 times. Now, for most people, that'll sound like the square on the hypotenuse of a right angle triangle.
So let's simplify this. We have a grid that is now getting fed energy from wind, solar, batteries, and the grid is just not managing to do this effectively because it was never built for that. So what are we going to do?
ANGUS TAYLOR: Well, you're exactly right. I mean, AEMO makes that data public, and we're not seeing this to anything like the same degree in others states as we are in South Australia, because what we saw in South Australia, up until recently, was a very big push to solar and wind without a plan about how to manage that. Now, that's changing. So what we're seeing is new gas generation coming into the market. I opened a gas generator in South Australia only a few months ago - which can alleviate the problem. We've got to see more gas and pumped hydro in the market. That's, you know, dispatchable power that can come on when you need it, rather than is there when the sun shines and the wind blows. You've got to have that dispatchable power matching the solar and the wind, and there was no plan to do that, it is being alleviated. Transmission of course is part of the answer as well, making sure you're well connected to other states, but you've got to have enough of your own dispatchable generation. The good news is, this is being addressed, but it should never have got to this point, and we are working very hard to make sure other states don't follow that lead. And look, it is it is working. We're seeing good progress now, Leon. Even before the virus hit, we were seeing wholesale electricity prices in South Australia down by 40 per cent or more, consistently. In fact, I was just looking at this week's data, both gas and electricity prices at the wholesale level are about half of what they have been. The critical thing now is this has to be passed on to consumers. So, the good progress we're seeing needs to be passed through, and we've got to make sure we've got a reliable grid.
LEON BYNER: Okay. I've got a question quickly about fuel.
ANGUS TAYLOR: Yep.
LEON BYNER: How are our fuel supplies?
ANGUS TAYLOR: The fuel supplies are in good shape. Not for a good reason - I mean, frankly, it's because the world is flooding with fuel at the moment because of-
LEON BYNER: And cheaply.
ANGUS TAYLOR: And very cheaply. So we're down below $30 a barrel. Now, the key here is to have that passed on. We've seen prices now in South Australia down around the dollar mark-
LEON BYNER: 86 cents, 86 cents today.
ANGUS TAYLOR: Yeah, exactly right, under a dollar. So, we think with the current price of fuel where it is, the ACCC advises us that the consistent price we're likely to see is around $1.10, and we'd like to see that kind of price consistently. But, you know, this is good news. The risk to our fuel supply is not a shortage - we've got lots of it - we've got to make sure our workforce-
LEON BYNER: How many days have we got here onshore now?
ANGUS TAYLOR: We've got, look, it's climbed and the latest data is suggesting we're getting up towards that 30 day mark, and it's climbing quite quickly.
LEON BYNER: Well it should be more than that, shouldn't it? Because a ship from America would take 40 days.
ANGUS TAYLOR: No, no, it takes less than that. That's not right. So, from Europe-
LEON BYNER: How many days?
ANGUS TAYLOR: Well, it depends whether you're coming from LA, or you're coming from the Gulf, but it's more like 20-30, Leon. But the truth is we have an enormous amount of fuel now building up. We're running out of storage in Australia-
LEON BYNER: That's an easy problem to fix isn't it?
ANGUS TAYLOR: Well, not in the short-term, other than to hold it in tankers offshore. And there's some of that actually happening at the moment, but-
LEON BYNER: Wouldn't take much to build a storage facility to make sure we're guaranteed, wouldn’t it?
ANGUS TAYLOR: Of course we can, but we can't do it overnight. That's the point.
LEON BYNER: Alright. How are our stocks of E10, which is a blend of unleaded and ethanol? Is there a shortage of ethanol because it's been used in hand sanitiser?
ANGUS TAYLOR: No, there's no shortage. I mean, we're making sure though that enough ethanol goes to hand sanitiser. I mean, that's important and the volumes there are relatively small compared to the volumes going into cars of course. But look, there is no, there's absolutely no shortage. People shouldn't run to the local petrol station to fill up like we had with toilet paper just because they're worried, they're panicking about it. We have ample supply. The crucial thing now is making sure we've got good hygiene in our petrol stations. Everyone touching the petrol pump is an issue. So sanitisers there in the petrol station, making sure they're regularly cleaned, that's really critical at the moment.
LEON BYNER: Minister, thank you for joining us. That's the Energy Minister, Angus Taylor with some good news there about particularly electricity.