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Mar 18 2020

Victoria’s go-it-alone approach retrograde move for end users

Victoria’s decision to step outside the National Electricity Market rules and go-it-alone on transmission developments is a retrograde step, the costs of which will be borne by the State’s energy users, according to the Australian Energy Council.

The Australian Energy Council’s Chief Executive Sarah McNamara said that the passing of the National Electricity (Victoria) Amendment Act (the Act) overnight allows the Victorian Energy Minister, without any transparency or cost-benefit assessment, to commit to major transmission upgrades.

“The National Electricity Rules currently require a robust assessment of potential investments in new transmission infrastructure. This assessment is run independently and at arms length from political considerations. Its focus is on the best interests of customers, who ultimately pick up the tab for grid investments.

“Investments in Victoria will no longer be subject to that test, which means customers may pay more. This is because every transmission and network investment will unavoidably affect market investments, so careful and individual assessments carried out at arms length from politics are critical.

“The Act has been rushed through the Victorian Parliament with no consultation and minimal scrutiny. It makes no effort to replace the regulator’s rigorous investment test with a Victorian equivalent. This can only be a bad outcome for Victorian households and businesses who may be locked into paying for multi-billion dollar investments with no confidence that it is the right call.

“The Act also creates uncertainty for private investors in generation, who can no longer rely on a transparent and independent decision making process for transmission investment.

“A coordinated national planning process has to date been a key cornerstone of delivering a truly national grid.

“State-based interventions increase instability in an already challenging market environment with knock-on effects for consumers in other states which are members of the National Electricity Market.”

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.

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