Interview with Peter Stefanovic, Sky News

PETER STEFANOVIC: Australia's Energy Ministers meeting in Brissy today, ahead of National Cabinet tomorrow. Let's try this again. Joining us live is the Climate Change and Energy Minister, Chris Bowen. There he is, he can hear us this time. Minister, good to see you. Thanks for your time. So will you get a deal done with the states on coal and gas price caps by the end of the week?

CHRIS BOWEN: Good morning, Pete, great to speak with you, and great to be able to hear you. Look, we are working very hard with the states, particularly with New South Wales and Queensland, because they're the coal-producing states, the black coal-producing states. So we've got Energy Ministers meeting today. That meeting is about the longer term plans, about the capacity of our system, about a keep the lights on mechanism, and I'm hopeful of making good progress with my State and Territory colleagues on that today.

Separately, me and my Energy Minister colleagues are supporting our Prime Minister and our premiers in their conversation. We have powers at our level at the Federal Government, the states have some powers. What we've done is work very hard to come up with a model where we use our powers most effectively, they use theirs, and we're talking to the states about that. And, look, I think, Pete, all the state Premiers, particularly New South Wales and Queensland, the two black coal-producing states, are acting in good faith, talking to the Prime Minister, thinking the issues through.

In one level this is very complicated, there's a lot of complicated policy parts, but another level, it's very simple. We can't let these power prices just blow through to the Australian people, to Australian industry, to Australian households. It's not their fault, it's Vladimir Putin's fault, and we're just not going to stand by and see that happen without taking the sting out of it.

PETER STEFANOVIC: Okay. There are problems with price caps though. And what I wanted to ask you is that if prices are capped, and the market pays less for that energy, what's to stop miners from just keeping it in the ground or selling overseas to someone who is willing to pay more?

CHRIS BOWEN: Well, they're the complicated issues, exactly the sorts of issues that we've been working through both with our legal advisers at the Commonwealth Government, with the states, talking to them about that. I mean there's lots of people out there saying, ‘Oh, this is all too hard, you can't cap, you can't do this.’ What's the alternative? Let Australians pay more for power next year?

PETER STEFANOVIC: Right.

CHRIS BOWEN: I mean I understand coal companies are out there today saying, ‘Don't change anything.’ They're quite happy with the profits they're making off the back of the war. We're not, we're not happy with Australian households and industry paying the price of that, so of course we are going to act. And what we're doing is talking to the states, as you'd understand, we've got a lot of power at our level, the states have different powers at their level, and in some cases, their powers we think can be used more effectively than ours. In other cases, we can use our powers. That's what we're talking to the states about. Those discussions have been happening for a long time now, for about a week or more, and they continue in good faith.

PETER STEFANOVIC: Right. But the point being that if you set up those price caps when it comes to coal, 125 bucks a tonne, you can't force them to do that, can you?

CHRIS BOWEN: There are various powers at the disposal of various governments, [inaudible].

PETER STEFANOVIC: So what would you do? Fines?

CHRIS BOWEN: Well, Pete, as much as I like you, I'm not negotiating through you. We talk to the states direct. But these are the complicated issues that have to be worked through. But as I said, on one level it's complicated, another level it's real simple. Are we going to let these price rises flow through?

I mean coal is a lot more expensive today than it was in December. Coal companies were making nice profits in December, and they were very sustainable. Now coal has gone through the roof, as has gas, since December. The only thing that's changed since then in relation to coal and gas around the world is the invasion of Ukraine.

Governments around the world are dealing with this; every government is responding in their own ways. I mean nobody is immune. That's why you've got left governments, right governments all looking at, you know, pretty serious responses, as we should, because it's not the fault of the worker going off at a factory today. Their bosses are coming under real pressure for energy prices to keep the doors open, we don't want to see those doors shut, since we're acting.

PETER STEFANOVIC: Right. What percentage of coal used in our power stations is under long term contracts and therefore not affected by spot prices since the war?

CHRIS BOWEN: It varies from state to state and power station to power station, Pete. Some have long term contracts locked in, some of the power stations. Others are working more on the spot market. It just really depends on which market, which power station. That's one of the issues that we've been looking at. It's different every -

PETER STEFANOVIC: But would it be a high percentage across the board?

CHRIS BOWEN: Well, look, again, it really does vary. You've got some power stations which have had contracts in place for a while; you've got others that have got contracts coming up for renewal; you've got others that are looking, you know, into the more median future. Everybody's different, and hence you've got to have a response. Your question is fair enough, but you've got to have a response to deal with all the possible scenarios, because one of the things we've been looking at in recent weeks is exactly the question you asked. If you did this, how much is already contracted? If you only acted on non contracted, how much is already contracted

PETER STEFANOVIC: Right.

CHRIS BOWEN: Well, it varies from power station to power station. And the way the system works is, the price is usually set by the most expensive generator at that particular time. So you can reduce the operating costs or the prices for a lot, but unless you're reducing it for the most expensive as well   that's why you've got to really act on it all. You can't just say, "Oh, we'll fix gas, we won't worry about coal." You can't say, "We'll fix coal, we won't worry about gas." You've got to do it all.

PETER STEFANOVIC: Right. But with so many unknowns there, how can you be sure that the policy will actually work?

CHRIS BOWEN: Well, because we've been working those issues through, and because we've been talking to the states about their understanding. I mean some of the states own the power stations; other states regulate the power stations. They've got very good data on the power stations cross structure. We've been talking to them and sharing that data.

That is the reason why, Pete, this has actually taken a little while to work through. You know, we weren't going to rush out three weeks ago with a solution, not having checked all these things that you're very legitimately raising. These are questions that we've been asking and checking for three or four weeks and working through with the states, exactly those sorts of questions.

PETER STEFANOVIC: Are you going to get a deal before Christmas?

CHRIS BOWEN: That's the plan. We've said we'll act before Christmas, because that's what we need to do. You've got price rises next year in the budget, which we were very up front with the Australian people about. We're not going to hide things like the previous government did, like Angus Taylor did. We've been upfront about that. Now, you get a draft increase in February, you get a final increase in May. That's why we're acting now.

PETER STEFANOVIC: Right.

CHRIS BOWEN: You've got to act now, because if you leave it till then, you left it too late.

PETER STEFANOVIC: Okay. Well, rather than cap prices, and I'll have to end here, because I'm out of time, rather than cap prices, because there are so many complications, as you point out there, would it not be more effective to just increase supply and delay the closure of Eraring and Liddell Power Stations until there's enough renewable capacity to replace that?

CHRIS BOWEN: No. I mean I've seen the coal companies out there saying that, and you know, that would be unsurprising that coal companies would say the answer is more coal. Liddell has been scheduled for closure since 2015, and that is just a statement of fact. And Eraring's got longer to go yet, but that is also not the answer here. We need a faster and more orderly transition to renewables, and that's exactly what I'm talking to state Energy Ministers about today, that element is down to us to sort. Governments have been talking about this for years. I'm very hopefully of taking a big step forward today to get that sorted. That's called a capacity mechanism, which is really a keeping the lights on mechanism, so get more renewables, but to do so in an orderly fashion and to make sure those renewables are firmed with storage; that's the cheap key challenge. The previous government couldn't get it done. I'm pretty determined to get it done.

PETER STEFANOVIC: Chris Bowen, we'll leave it there. Appreciate your time though. We'll talk to you again soon.