General GNX News, page-319

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27 May 2019

EnergyAustralia expects to give the green light to about $1 billion of gasand pumped hydro generation projects later this year despite the absence ofoverarching policy on energy and climate from the federal government as itseeks to keep prices affordable and fend off competition.

Mark Collette, a long-standing senior executive at the utility who has justbeen appointed head of the retail business, said the Tallawarra B gas powerexpansion in NSW and pumped hydro projects in South Australia and Queenslandwere on the cards to reach a final investment decision this year.

The plants could produce electricityon-demand, helping guarantee reliable power after the expected closure of AGLEnergy's Liddell coal plant in 2022 and as intermittent wind and solar generationincreases. They are among projects that have been in doubt on timingbecause of uncertainty over policy and interventionist measures by government.

Genex's Kidston pumped hydro project in Queensland will supplyEnergyAustralia.

"The Coalition did a great job running acampaign that got them re-elected, and our focus is on delivering the bestpossible outcomes for customers," Mr Collette said in an exclusiveinterview in the days after the Morrison government's surprise win in theelection.

"We think these projects are really good in adding reliability andadditional supply into the system and that’s our focus at the moment."

Mr Collette, whose formal titleis "executive – customer", is replacing Kim Clarke, who left asEnergyAustralia's chief customer officer last year, but in an expanded rolethat also includes the Next Generation business which has been integrated intothe customer business

He has been replaced as "executive – energy' – the head of the energysupply business – by Liz Westcott, who joined EnergyAustralia last year fromExxonMobil and will be responsible for delivering the new projects. At the sametime, Ross Edwards has been appointed executive – markets.

MrCollette said the integration of the NextGen business, which covered new energybusinesses such as integrated solar and storage and energy management systems,would "combine the old and the new" to give customers lower prices,cleaner and reliable power.

Mark Collette is now running EnergyAustralia’s retail business.

The circa $400 million Tallawarra B project involvesadding a 400-megawatt gas unit at EnergyAustralia's existing plant nearWollongong. The timing has slipped from the late 2018 or early 2019 target for a go-ahead given by MrCollette last July.

The pumped hydro projects involve the Cultana venture in South Australiaand Genex Power's $330 million project in North Queensland,which will supply power to EnergyAustralia. Both were submitted forconsideration under the Coalition government's controversial Underwriting NewGeneration Investments scheme, which was in the end limited to smaller players.

The underwriting scheme, which is expected to be pursued by the returnedMorrison government, paves the way for indirect taxpayer support for almost 4000 MW of mostly gas and pumped hydro projects thatwould compete against EnergyAustralia's new plants.

The utility has been among those in the sector that maintain the schemeisn't needed, and have also opposed the semi-regulation of retail prices. Chairman Graham Bradley said last week EnergyAustralia stillhad "big differences" with the Morrison government on energypolicy.

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But Mr Collette wouldn't be drawn into any criticism: "We think theseprojects deliver some of the physical solutions that are needed in the systemand that’s why we are pushing ahead on them," he said. "As theexecutive for customers I want those power stations there so I can supply mycustomers reliably and affordably."

Similarly on the default market offer prices that will be introduced July 1and which will replace costly standing offers for customers not on acompetitive offer, Mr Collette was diplomatic.

"I'm a realist, it’s here, we are going to make the best of it as wepossibly can," he said. "The biggest challenge that we, the industry,government and everyone has is it’s a lot of change to process quickly andthere's the potential for a lot of customer confusion."

EnergyAustralia managing director Catherine Tanna warned last year that the introduction ofdefault offers could lead to some customers paying more because discountingcould diminish.

But Mr Collette said he had a different view.

"From a customer’s perspective, fantastic, bring it on," he said."If companies are unable to match what's prevailing in the market theywon’t survive. Our focus is on being a business that not just survives butthrives because we have competitive offers and customers choose to join us andstay with us."