The Federal Government is seeking to introduce new rules to ensure energy companies provide five years' notice before closing power stations, amid concerns about reliability and affordability.
The change was proposed by Energy Minister Angus Taylor, who was seething when Origin Energy announced the closure of Australia’s largest coal-fired power plant, Eraring, without first notifying the government.
Mr Taylor warned that earlier-than-expected closures could lead to spikes in electricity prices for consumers, although energy experts and industry observers have insisted any impact would be muted.
Under the current rules — set by the Australian Energy Market Commission (AEMC) rather than the government — electricity companies need to provide at least 3.5 years' notice of an upcoming closure.
Mr Taylor will today argue that length of time does not give the sector long enough to invest or develop new projects that could replace the electricity provided by closing plants.
"Without this rule change, there is a risk that retiring capacity is not replaced in time or is only able to be replaced with inadequate or inefficient options that are available in short time frames, risking the reliability, affordability and security of the system," Mr Taylor said in a statement.
The federal government does not set these rules and, instead, makes a submission to the AEMC and lobbies for the change.
If accepted, the rule change would not impact closures that have already been announced, such as Eraring or the closure of the Liddell power station that is operated by AGL.
When Origin announced the early closure of the Eraring plant in February, Mr Taylor noted the company had given the minimum notice period of 3.5 years.
“This decision is bitterly disappointing for all energy users — from households to small businesses to heavy industry — who rely on affordable, reliable energy to prosper,” Mr Taylor said at the time.
However, the head of the Australian Energy Market Operator, Daniel Westerman, was less concerned and noted the quick uptake of other technologies.
“Planned additional transmission capacity — including the announced battery — will give the state access to enough electricity generation to meet the Energy Security Target at the time Eraring closes,” Mr Westerman said in a statement.
Mr Taylor said the federal government had already reached an early underwriting agreement for work on an interconnector between Victoria and New South Wales.
The Coalition would provide $75 million to enable Transgrid to start community engagement on a project that could deliver an additional 1,800 megawatts of capacity between the two states.
"We are investing in VNI West because it is expected to generate $1.9 billion in net market benefits and will be a key part of an efficient transmission backbone for the electricity market," Minister Taylor said.
ABC
