Nick Toscano
The Liddell power station in the Hunter Valley.
The federal government has swiftly renewed its hardline approach to the energy sector, threatening tough action against power retailers who fail to ensure that they have adequate supply for the households they are serving.
Asked about looming closure of AGL’s coal-fired Liddell power station in 2022, which will remove 1680 megawatts from the grid, Energy Minister Angus Taylor warned yesterday that the government was prepared to utilise new laws to ensure reliable power supply and prevent blackouts and brownouts.
Mr Taylor said the Retailer Reliability Obligation, which takes effect from July 1, required energy retailers to ‘‘meet the needs of customers with enough despatchable, 24/7 power’’ and provides for stiff financial penalties if they do not.
‘‘That means Liddell will either have to be replaced or extended – its life extended – one or the other,’’ he told Sky News. ‘‘Because if it doesn’t they’ll be in breach of this obligation – a new set of rules that came into place, agreed to, in December last year and will be in place by July 1.’’
Mr Taylor said the federal government would closely monitor energy retailers’ responses to the looming closure of Liddell, warning there would be ‘‘serious penalties incurred if it’s not done right’’.
In 2017, AGL announced a $1.36 billion, three-phase plan to replace the power supply that will be lost when the company closes the Liddell plant in the Hunter Valley of NSW at the end of its technical life in 2022.
Its plans include upgrading AGL’s nearby Bayswater power plant, building 1600 megawatts of renewable generation capacity and 250 megawatts of battery storage over five years.
If Mr Taylor retains the federal energy portfolio in Prime Minister Scott Morrison’s looming cabinet reshuffle, sources said, one of his priorities would be seeking a meeting with AGL executives to discuss their plans following Liddell’s closure.
The Coalition government has been urging AGL to keep the Liddell plant open or sell it, calls which AGL has rejected.
Grattan Institute energy director Tony Wood said Mr Taylor’s signal on the use of the reliability obligation to ensure supply was more sensible than attempts to force AGL to keep the plant open.
‘‘The retailer reliability obligation is a perfectly sensible thing to do and if it works the way it’s supposed to work then it will ensure we have reliability post the closure of Liddell, putting an obligation on the retailers to cover their demand into the future,’’ he said.
‘‘If they are not looking as though they will, then the Australian Energy Market Operator can do things to start intervening in the market.’’
What remained less clear, Mr Wood said, was the sort of penalties that would be imposed on energy companies under the obligation.
‘‘To make the obligation work, there will have to be a combination of carrots and sticks,’’ he said.
AGL declined to comment yesterday.
The move came as the political implications of the weekend’s election for the future of fossil fuels continued to reverberate around the country.
Labor suffered heavy swings against it in the coalmining Hunter Valley region which frontbencher Joel Fitzgibbon blamed on the opposition’s approach to coal and climate change, particularly the Adani coal mine in the Bowen Basin.
In Queensland, Labor’s lack of support for the controversial Adani project has been cited as a major factor by many experts for the party’s poor showing in the state.
Premier Annastacia Palaszczuk visited a coal terminal yesterday and declared that Queenslanders had had ‘‘a gutful’’ of the Adani issue.
She pledged that her government would provide certainty on the timing of outstanding approvals by the end of the week.
Today's Age
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