Tasmanian Greens MPs Reply to the Electricity Supply Industry Expert Panel: Powering Tasmania s Transition to a 100% Renewable Energy Future

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1 T a s ma n a ng eensmps Repl yt ot hee l ec t c t ys uppl yi ndus t ye x pe tpa nel Powe ngat ans t ont oa1 0 0 %Re ne wabl ee ne gyf ut u e Rel ea s edaugus t2012 Aut ho s edbyn c kmc K m MP, Pa l a menthous e, Hoba t, 7000

2 Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel: Poweng Tasmana s Tanston to a 100% Renewable Enegy Futue Backgound: The ndependent Electcty Supply Industy Expet Panel (ntated va negotatons between the Geens and Labo, and then establshed va Palamentay legslaton n 2010) eleased the ecommendatons n Mach The Panel s key efom components ncluded the followng ssues: 1. Full Retal Contestablty (FRC) & consoldate Auoa s dstbuton netwoks wth Tansend 2. Also sell Auoa s etal custome base (Bllng and Call Cente) 3. Refom of Hydo Tasmana: by beakng up Hydo Tasmana s tadng capacty nto thee sepaate GBE s, Gen Tades. 4. Tama Valley Powe Staton (TVPS) 5. Momentum 6. Entua State Labo announced the fomal esponse n Palament on the 15 May The State Lbeals have also announced the poston vtually acceptng that poposed by the Enegy Mnste but condtonal on the etun of the cabon tax to Tasmanans. The Geens eleased (15 May 2012) a set of pncples by whch both the Panel s and Labo s postons would be evaluated to nfom the development of a Geens poston: 1. Lowest possble powe-pces (patculaly fo domestc and small busness customes) 2. Povde enegy secuty 3. Maxmsng the State s cabon dvdend, and tanston to 100% enewable as soon as possble o by the latest Maxmsng tanspaency of enegy secto 5. Mnmsng o elmnatng unnecessay sk to the Tasmanan taxpaye 6. Recognton of pactcal complextes of enegy efom mplementaton 7. Be based on nfomaton and data fom Panel, Teasuy and Hydo Tasmana 1 1: Meda elease ssued by Geens Leade Nck McKm MP, 15 May 2012 Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 1 of 9

3 Tasmanan Geens Poposed Enegy Secto Refom Package Ovevew The Tasmanan Geens ecognse that the sng pce of powe, the secuty and souces of the sland s enegy supply and the tanston to a low-cabon economy ae key concens fo the Tasmanan people. As an sland communty stvng to buld a pospeous and sustanable futue, we ae pesented wth sgnfcant challenges and majo oppotuntes. 1 The State s futue economc wellbeng and enegy secuty wll be undepnned by ensung the enegy efom pocess - ntated n Palament by the Geens wth tpatsan suppot n 2010 succeeds to delve maxmum, sustanable socal and economc beneft. The Geens MPs beleve the development of a long tem Enegy Stategy fo Tasmana s essental to buld on the wok of the Expet Panel nto Tasmana s Electcty Supply Industy, and on Tasmana s natonal clean enegy advantage n an evolvng low-cabon economy. Summay Response to Expet Panel Recommendatons: In ts fnal epot, the Expet Panel pesents a detaled set of aguments fo majo efom and estuctue of Tasmana s thee Govenment-owned enegy busnesses. We agee fundamental efom of the Electcty Supply Industy (ESI) s needed to delve maket based, compettve and tanspaent wholesale and etal pcng. Ths pape outlnes the Tasmanan Geens MPs poston on the majo components of enegy efom whch should nfom, and be consstent wth, a Tasmanan Enegy Stategy followng the delvey of the Expet Panel s fnal epot. 1 Tasmanan Geens Paty Enegy Polcy The Geens beleve efom of the Tasmanan wholesale and etal enegy maket must be undetaken stategcally, wth a vew to delveng: long-tem clean and secue enewable enegy supply fo the State. the lowest sustanable powe pces fo domestc and busness customes. maxmum enegy effcency fo households, small busness, govenment and majo ndustal enegy uses. genune tanspaency n the opeatons of the wholesale and etal makets n Tasmana. the polcy and nfastuctue enables needed to ncease nvestment n enewable enegy souces. Tanston to 100% enewable powe fo Tasmana by Nck McKm MP meda elease 15 May Km Booth MP meda elease, 18 June Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 2 of 9

4 Detal of Poposed Enegy Secto Refom Package: Ths s a summay of the Geens poston n esponse to the Panel s dentfed key aeas of efom. Futhe detal and atonal ae expanded on below. Geens Poston Full Retal Contestablty (FRC)-& consoldate Auoa s dstbuton am wth Tansend Suppot FRC. Suppot consoldaton of tansmsson and dstbuton netwoks nto a sngle entty. Sell Auoa Enegy s etal am (Bllng and Call Cente) Suppot the sale of Bllng and Call Cente. If no satsfactoy offes suppot tansfe to Momentum. Hydo Tasmana s tadng capacty boken nto thee sepaate Gen Tades Do not suppot 3 Gentades Instead popose that a thee tadng oom model wthn HT s establshed, subject to a costbeneft analyss; and n the ntem egulate. Tama Valley Powe Staton Do not suppot sale. Popose t s tansfeed to HT, and exploe lease at fa value untl 2017, and then mothball. Momentum ENTURA SMART GRID & NBN (Geens addtonal efom ctea) Conduct a costbeneft assessment on mpacts of potental sale and optmal tme fo potental sale. In the ntem ensue t s on a level playng feld wth othe etales, & equng Momentum to epot as f they ae a sepaate entty. Sell fo fa value. Poceeds of the sale should be potsed to pay down HT s debt, and fo geneaton nfastuctue mantenance. Suppot plannng and nvestment n, and utlsaton of, Smat Gd and NBN technology. Measued aganst Geens set of Pncples (Secton 7 above) Povdes fo lowest possble powe pces Maxmsng tanspaency Lowest possble powe-pces Lowest possble powe pces Maxmsng tanspaency Maxmses cabon dvdend, tanston to 100% enewable by 2020 Recognses pactcal complextes of enegy efom Povde enegy secuty Tanston to 100% enewable by 2020 [ Mnmses unnecessay sk to taxpaye Recognses pactcal complextes of enegy efom Mnmsng o elmnatng unnecessay sk to taxpaye Maxmsng tanspaency Recognses pactcal complextes of enegy efom Mnmsng o elmnatng unnecessay sk to taxpaye Povdes fo lowest possble powe pces Tanston to enewable by 2020 Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 3 of 9

5 Full Retal Contestablty The Geens ecognse that the success of Full Retal Contestablty (FRC) n Tasmana needs to be undepnned by wholesale maket efom and estctng Hydo Tasmana s capacty to uneasonably poft at the expense of etal customes. Whle the Expet Panel makes lmted comment on demand-sde management as a means to lowe powe costs, the Geens also stongly suppot contnued nvestment n enegy effcency upgades fo Tasmanan households, small busness, govenment and ndustal uses. Geens Poston: The Geens suppot Full Retal Contestablty (FRC), and also suppot consoldaton of dstbuton and tansmsson netwoks nto a sngle entty. Regulaton The Geens accept that stonge egulaton s equed to mpove Hydo Tasmana s govenance stuctues, ts copoate conduct as a wholesale on the NEM and to the etal maket n Tasmana as well as ts poven hstoy of embakng on potentally hgh-sk, non-coe busness ventues ntestate and oveseas. We beleve stonge egulaton of Hydo Tasmana wll help to delve etal pcng benefts to households and small busness. The Geens ae not, howeve, pesuaded that egulaton alone wll be enough. The Geens endose n-pncple the Tasmanan Teasuy s ecommendaton to heavly egulate Hydo Tasmana s opeatons n the ntem, estctng ts wholesale monopoly powe. Ths wll mpove govenance and tanspaency, and delve benefts to etal customes though lowe wholesale pcng. Hydo Tasmana The Tasmanan Geens oppose the pvatsaton of Hydo Tasmana s electcty geneatng assets. 2 The Geens beleve that pevous govenment decsons, and ecent polces n the Tasmanan enegy secto, have substantally nceased the sk of advese outcomes fo Hydo Tasmana, ncludng ts own fnancal dffcultes, contbutng to an excessve debt buden fo the GBE. Majo aeas of concen nclude the sk of deceasng anfall and snowfall, Hydo Tasmana s hgh-sk expansonst stategy, and that one o moe of the bulk powe consumes may leave the state o nsst that contacts be ewtten n tems less favouable to Tasmana. The Geens accept the Panel s fndng that Hydo Tasmana welds too much wholesale monopoly powe and that ths has come at a pce to etal customes. The Expet Panel ecommends beakng up Hydo Tasmana s tadng capacty nto thee sepaate Gen Tade Govenment Busness Entepses tadng tanspaently and compettvely on the Natonal Enegy Maket (NEM). Hydo Tasmana unde ths scenao would be esponsble only fo electcty geneaton. It would also be equed to dvest ts consultancy am, Entua, and ts manland etal busness, Momentum. 2 Tasmanan Geens Enegy Polcy Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 4 of 9

6 Geens Response to Poposed GenTade Model Afte detaled and caeful consdeaton, the poston of the Tasmanan Geens s to not suppot the GenTade model poposed by the Expet Panel. Whle we ecognse ts potental to delve moe compettve and tanspaent wholesale pcng n Tasmana, we ae concened about the sgnfcant potental ths model - f appled - pesents fo pvatsaton of a publc asset that s a majo souce of evenue to the State, patculaly now n the context of the cabon pce. We ae also concened about the potentally hgh cost to the publc puse of establshng and staffng thee sepaate GBEs and the sks nheent n thee publcly-owned enttes ethe cannbalzng each othe o colludng, n an effot to suvve n the NEM. Geens Poston: The Geens do not suppot the Panel s ecommendaton fo thee new sepaate Gen Tades to be establshed. Geens Poposal: Tadng Room wthn Hydo Tasmana The Geens also, howeve, beleve that thee may be an altenatve to ethe the GenTade o solely egulatoy model. That s to establsh thee tadng ooms opeatng as sepaate enttes wthn Hydo Tasmana to povde geate tanspaency of wholesale pcng of the GBE s maket conduct as a playe on the NEM. The govenance model would have ACCC ovesght and meet natonal competton standads fo wholesale electcty. These tadng ooms would be staffed, as much as possble, by Hydo Tasmana staff wth elevant expetse. The Geens equest that the Teasue ask Teasuy offcals to undetake a cost-beneft analyss of ths tadng oom poposal wth a vew to fnalsng ths wok by Novembe Geens Poston: The Geens popose that a thee tadng oom model wthn Hydo Tasmana s establshed, subject to a costbeneft analyss; and n the ntem egulate. Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 5 of 9

7 Dstbuton/Tansmsson Netwok As ecommended by the Expet Panel, the Geens suppot the amalgamaton of the tansmsson and dstbuton netwoks, cuently opeated by Tansend, and Auoa. Ths would allow fo a moe effcent delvey of electcty acoss the State. The amalgamated entty would be tasked wth dvng the development of an ntellgent/smat gd system fo Tasmana, enablng nceased nvestment n enewables, dstbuted geneaton, enegy effcency and demand sde management. Ths wll lead to lowe electcty supply costs and theefoe lowe powe pces fo etal customes. The Geens suppot the tansfe o sale of Auoa s emanng assets - ts bllng system and call cente - at the same tme as ts custome base s put on the maket. Geens Poston: The Geens suppot the consoldaton nto one sngle entty the dstbuton and tansmsson netwoks cuently opeated by Auoa and Tanscend espectvely. Tama Valley Powe Staton The Tama Valley Powe Staton (TVPS) s a majo buden on Auoa and a sgnfcant contbuto to hghe powe pces fo households and small busnesses n Tasmana. As a fossl fuel geneato, the contnued opeaton of TVPS comes at a hgh cabon pce, both economcally and envonmentally. Ou poston s that the TVPS should be tansfeed to Hydo Tasmana to be etaned solely fo enegy secuty puposes, and examnaton gven to the leasng of TVPS and the hgh cost take-o-pay gas contacts due to expe n Geens Poston: The Geens do not suppot the sale of the TVPS. Instead we popose t s tansfeed to Hydo Tasmana, and a lease opton at fa value untl 2017 s exploed. The TVPS should be mothballed afte Geens Poston: The Geens suppot the sale of Auoa s Bllng and Call Cente. If no satsfactoy offes to buy ae eceved, then suppot tansfe to Momentum. Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 6 of 9

8 Momentum The Tasmanan Geens accept the Panel s fndng that Momentum s not coe Hydo Tasmana busness and that t pesents a level of sk to the taxpaye. Howeve, we also ecognse that Momentum s a vehcle fo delveng suplus enewable enegy to Vctoa va Basslnk. Fo the pupose of povdng tanspaency the Momentum busness must epot as f t wee a stand- alone entty, whle t emans n Hydo Tasmana s hands. The Geens suppot the development of a busness case by Teasuy fo the potental futue sale of Momentum. In ths analyss, consdeaton needs to be gven to Momentum s opeaton unde the Clean Enegy Futue Package as well as the sustanablty of ts busness model and level of sk to the State s nteests. Wth the cost-beneft analyss completed, and po to any sale, the Geens suppot a fomal evew of Momentum s opeaton as a manland etal am of Hydo by 1 July We beleve these measues wll ensue the ght decson s beng made to ensue the geatest etuns and beneft to Tasmanan taxpayes. Geens Poston: The Geens suppot a cost-beneft assessment to be conducted on the potental sale of Momentum, and the optmal tme fo any sale. In the ntem Momentum must opeate on a level playng feld wth othe etales, and be equed to epot as f t s a sepaate entty whle s emans n the hands of Hydo Tasmana. Entua Whle the Geens ecognse that Entua has enabled the expot of enewable enegy expetse ntenatonally, we beleve ths has not n all ccumstances been undetaken wthout heavy socal cost n developng natons. The dsplacement of ndgenous communtes n Saawak as a esult of hydo-electc development techncally suppoted by Entua s a key example. Agan, we agee wth the Expet Panel s detemnaton that Entua s opeaton does not epesent coe busness fo Hydo Tasmana n ts pmay oblgaton to Tasmanan powe uses. The Geens also beleve thee s no pactcal mpedment to sustanable enewable development expetse beng delveed by a pvately owned Entua. The Geens suppot the sale of Entua as long as a easonable pce s acheved. Poty would need to be gven to etanng staff expetse to ensue Hydo Tasmana nfastuctue and enegy secuty oblgatons ae met. Revenue fom the sale of Entua should be envested n Hydo Tasmana nfastuctue mantenance potes and to pay down debt. Geens Poston: The Geens suppot the sale of Entua fo fa value. The poceeds of the sale should be potsed to pay down Hydo Tasmana s debt, and fo geneaton nfastuctue mantenance. Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 7 of 9

9 Lookng Fowad: A Smat Gd - Investng n 21 st Centuy Infastuctue The cost of mantanng and upgadng exstng electcty tansmsson and dstbuton nfastuctue has dven up powe pces fo etal customes and wll contnue to do so unde a busness as usual scenao. Ou cuent gd s also unable to cost effectvely suppot new and emegng geneaton technologes. A Smat Gd delves electcty fom supples to consumes usng dgtal technology to save enegy, educe cost and ncease elablty. Such a modensed electcty netwok s beng mplemented n developed and developng natons globally as a way to addess enegy ndependence and clmate change. It has huge benefts fo ntegatng enewable enegy technologes acoss the gd and demand sde management, all facltated by the oll out of the NBN n Tasmana. Integatng smat gd technologes nto ou exstng gd would tansfom ou tansmsson and dstbuton system nto a moden netwok that empowes utltes and consumes to change how we ceate and consume enegy. It would delve geate custome beneft though demand-sde and peak-load management, as well as ntegaton of exta hydo, sola, wnd and geothemal technologes to ncopoate moe dstbuted geneaton. Whle Tasmana cuently has a suplus of enegy ths cannot be assued n tmes of dought. Futhemoe, we should be postonng ouselves to take advantage of ou clean enegy capablty n a cabon constaned economy. We should be coutng ndustes whch ae enegy ntensve Geens Poston: The Geens fo, and nvestment nto, a Smat Gd fo Tasmana by yet pogessve n the dese fo clean enegy. Examples of ths would be fnancal nsttutons and the data centes, o Apple and ts Cloud. In ode to maxmze the oppotuntes ou natual advantages pesent, we beleve Tasmana needs to mmedately begn the nfastuctue and captal nvestment plannng equed to delve a Smat Gd fo Tasmana by Tanston to a Low Cabon Economy The Tasmanan Geens ecognse that cabon pcng offes enomous benefts fo Tasmana - a natonal leade n the poducton of clean enegy, wth an abundant Hydo esouce along wth nceased nvestment n wnd powe, sola and dstbuted geneaton. Moe than eghty pe cent of ou electcty comes fom clean and enewable souces. Renewable enegy geneaton has bought massve benefts to all Tasmanans fo decades. The estuctue of Tasmana s electcty supply ndusty can take advantage of ths stong hstoy n enewable enegy and take advantage of these benefts, allowng the State to ean evenue to nvest n socal sevces and publc nfastuctue, as well as powe pce offsets. Tasmana s well placed to acheve 100% enewable enegy supply by 2020 wth the capacty to expot suplus geen powe to manland Austala. Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 8 of 9

10 Concluson: The Tasmanan Geens beleve that t s cucal to stuctue ou enegy efom aound a vson fo a sustanable and ntellgent futue. Ths means maxmsng ou cabon advantage, nvestng n smat nfastuctue, takng up oppotuntes fo geen job ceaton, and mplementng measues that wll dve Tasmana s tanston to a 100% enewable enegy futue, and the ponts as dscussed above. Ths poston pape sets out a path to a clean, geen, enewable enegy futue fo Tasmana. We beleve the poston we have atculated n esponse to the Expet Panel nto Tasmana s Electcty Supply Industy s one that wll geneate long tem, sustanable pospety and wealth dectly lnked to communty and envonmental benefts fo the Tasmanan people. In the epot, Boadband Communcaton Enables Sustanable Enegy Sevces, the ANU s D Mke Denns and D Haley M. Jones fnd that: Austala s electcty supply nfastuctue eques nvestments exceedng $100 bllon ove the next 25 yeas to mantan qualty of sevce to domestc uses. Beng caeful to dstngush enegy sevce needs fom electcty delvey, the case s made fo dstbuted enegy sevces whch offe mpoved sustanablty outcomes to the tadtonal monolthc geneaton model. A key enablng technology fo commecal success of the poposed paadgm s a boadband communcaton stuctue. Boadband s essental n meetng the cost educton and pefomance tagets that would allow a dstbuted enegy sevce model to succeed. Usng boadband, a lage numbe of novel busness oppotuntes ase. The Austalan Govenment s chef enegy foecastng body, the Bueau of Resouces and Enegy Economcs (BREE), pedcts that by 2030 the cost of coal-fed geneaton wll have doubled and enewable eneges, ncludng onshoe wnd and sola PV, wll be the cheapest foms of enegy avalable. Ths has pofound mplcatons fo electcty netwoks, dstbuton systems and Austala s oblgaton to meet ts tageted geenhouse gas emsson eductons. Rapdly beng mplemented n places such as Chna, the U.S., Japan, South Koea, Span, Gemany, the U.K., Fance, Bazl and Malaysa, Smat Gd technology enables effcent gd opeaton, custome engagement and nceased capacty to manage powe demand usng new and exstng I.T. nfastuctue. Tasmanan Geens MPs Reply to the Electcty Supply Industy Expet Panel. August Page 9 of 9