Nov 4, 2016

Hazelwood closure bad news for Victoria warns Josh Frydenberg

Malcolm Turnbull says the demise of the Hazelwood power station in Victoria’s Latrobe Valley will improve the business case for a second Basslink interconnector between Victoria and Tasmania.
Speaking on Tasmanian radio station LAFM, the Prime Minister said the closure of Hazelwood was likely to see Victoria go from being a net exporter of electricity to a net importer.
“That would improve the economic viability, the business case for the second connector,” he said.
Former state minister Warwick Smith has been commissioned by the federal government to investigate the viability of a second connector.
“It would certainly improve the economics because there would be more demand for Tasmanian electricity across Bass Strait.No doubt about that,” Mr Turnbull said.
“If as has been forecast Victoria becomes a net importer of electricity, the opportunities are essentially New South Wales and Tasmania and South Australia, although South Australia’s had its own as you know energy security problems, occasioned by the state government’s mismanagement of their energy security.
“I think the opportunities for exporting electricity will be increased and that should, all other things being equal, improve the business case for a second connector.”

Andrews adds $222m in support

Victorian Premier Daniel Andrews has announced an extra $222 million to support the Latrobe Valley community cope with the closure of the Hazelwood coal-fired power plant.

But the opposition has dubbed the move “bastardry disguised as charity” given the Andrews government’s recent tripling of the brown coal royalty.

The announcement adds to $42m already promised yesterday, bringing the state government’s total commitment to $266m.

Speaking in Morwell, Mr Andrews said the package would help to establish a Latrobe Valley Authority, provide $22m to help workers retrain and get financial and personal counselling, $50 million to attract businesses by cutting the cost of relocation to the Latrobe Valley, and provide $174m for important local infrastructure projects.

“Normally, I would be able to run through for you a long list, adding up to exactly $174m,” he said.

“But instead, my colleagues and I, having listened to this local community, we’re going to do something a little bit different and we’re going to listen to this community and continue to engage about the infrastructure projects that are most important to the Latrobe Valley.”

Mr Andrews said the spending would include rail and road, schools and sporting and community facilities.

Victorian Shadow Treasurer Michael O’Brien said the announcement scarcely made up for $252m the Andrews government would be receiving in extra taxes from January 1 as a result of its decision to triple the brown coal royalty.

“In this year’s budget Daniel Andrews ripped $252m in new taxes out of the Latrobe Valley but now he wants credit for giving some back,” Mr O’Brien said.

“This is bastardry disguised as charity.

“With other Latrobe Valley power stations under economic pressure, Daniel Andrews should immediately put this massive tax hike on hold.”

Mr O’Brien said the Andrews government’s “ideologically driven” 40 per cent renewable energy target was also designed to make Latrobe Valley generators uncompetitive.

Hazelwood ‘bad for Victoria’

Earlier, Energy Minister Josh Frydenberg said the closure of the Hazelwood power station in the Latrobe Valley will result in Victoria going from being a net exporter of electricity to other states, to a net importer, Environment and Energy Minister Josh Frydenberg says.

French company Engie, which owns the plant, announced yesterday that it would be closing the coal fired plant in March, leaving up to 1000 people in the Gippsland valley without a job.

Mr Frydenberg said Australia could not afford the closure of another Hazelwood in the near term, and accused the state Labor government of driving Engie out of town in a bid to win green votes in inner city electorates.

“Already I’m being told by the Australian Energy Market Operator that supply is very tight,” Mr Frydenberg told ABC radio.

“As a result of this decision to close Hazelwood, Victoria will go from being a net energy exporter — it already provides about 14 per cent of South Australia’s energy and about six per cent of New South Wales’ and six per cent of Tasmania’s ... to an importer of energy.

“That’s not good news for Victorians.”

Mr Frydenberg said Hazelwood represented 22 per cent of Victoria’s electricity supply and around four per cent of the national electricity market.

“You take out of the equation the cheaper brown coal fired power, and you put in its place gas, renewables, or indeed the importation of black coal fired power from New South Wales, and you will get higher prices and you will invite more instability into the system,” he said.

Mr Frydenberg said the estimated four to eight per cent price increase the loss of Hazelwood would deliver to Victorians was significant.

“That’s $86 a year, and it won’t just be in the first year, it will also increase in subsequent years,” he said.

“That’s about $1.65 a week, and if you’re a single mum with three kids at home and you’re heading into a hot summer or a cold winter and you need to use your heating or your cooling, that will impact on you.”

Mr Frydenberg said that while the Coalition understood the importance of a lower emissions future, the highest priority was energy security.

“That’s in stark contrast with the Labor Party, who have pursued an ideological approach which has meant that they have traded away blue collar jobs in the regions to win green votes in the city,” he said.
Mr Frydenberg also accused the Andrews Labor government in Victoria of driving Engie out of town, by tripling the coal royalties the company was required to pay the state, and setting an “unrealistic” 40 per cent state based renewable energy target.
Shadow Industry Minister Kim Carr said that while the government’s announcement yesterday of $43 million to help the Latrobe Valley community recover from the closure was welcome, it was a “stop-gap” measure, and would not have the necessary long term impact.
“This is a situation that requires more than fine sentiments of collaborations and consultations,” he told the ABC. 
“It actually requires the resources to be put behind job creation.
“We can train people all we like, but unless there’s jobs for people to go to, then there is inevitably going to be frustration as people fail to secure the economic prosperity of their families. It’s worth noting that in the budget of 2014, this government actually cut $9.6 million out of the Latrobe Valley economic diversification program.”
Engie Australian chief executive Alex Keisser said the company had been in talks with the Turnbull and Andrews governments for several weeks, and had come to an ultimate decision earlier this week.
“This is not a decision to take lightly,” he told ABC radio.
“It is very terrible for the region and for all of our employees.”
Mr Keisser conceded the need for long term stability in energy policy had played a part in the decision.

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