Interview with Andy Park, ABC RN Drive

ANDY PARK: The Australian Energy Market Operator has flagged possible shortfalls in gas this winter in the event of extreme weather and long-term gas shortfalls are forecast across the country from 2027 without more investment in supply. It comes a day after the Australian energy regulator revealed draft power prices increasing of between 20 and 22 per cent across South Australia, New South Wales and South East Queensland. Joining me now is the Assistant Climate Change and Energy Minister Jenny McAllister. Welcome to you, Senator.

JENNY MCALLISTER: Thank you.

ANDY PARK: How is Labor going to ensure there isn't a gas shortfall this winter?

JENNY MCALLISTER: Well, today's report and the DMO released earlier in the week are a real reminder that having an orderly and well-regulated energy system matters a lot to ordinary households, right. Because in the end, those are the arrangements that can deliver affordable and reliable energy. And our overall approach since coming to government has been to try and bring an end to the dysfunction and the disorder of the previous government and re-establish some of those more orderly arrangements. That means working with counterparts in states and territories and it means paying attention to the advice that's delivered to us by the market bodies. You asked what we will do about winter. This is something that we've been thinking about extremely carefully and working with state and territory counterparts since last winter, frankly. We know that the previous government were warned on many occasions that there were problems in the gas market, but they didn't take any of the steps to address it. And so, what we've been doing is working with our state and territory counterparts to give AEMO the powers they need to manage these challenges in the winter and also to make sure that the conditions are right for the investment that's required for the longer term.

ANDY PARK: The energy regulator said Labor's price cap on domestic gas has fuelled investment uncertainty. It's a point that the Shadow Energy Minister Ted O'Brien made on RN drive yesterday. Are you standing by the Albanese Government's intervention? Is this a failed policy?

JENNY MCALLISTER: It was incredibly important that we intervene in the market in the way that we did in December. The projections for price increases back in November last year were very, very high indeed. And all of the evidence before us indicates that the intervention that we made has really taken the sting out of the tail of the price increases that are expected this year. That said, it is still going to be a really tough year for a lot of households. We're incredibly focussed on the price pressures that are flowing through the households at the moment. They're not just in energy, they're in mortgages, they're in rents, they're in groceries. And anything that we can do to take the edge off that, we are interested in exploring. The intervention at the end of last year was enormously important. And you can see it in the fact that the actual drafted DMO has a much less impactful price increase than would have occurred had we not intervened.

ANDY PARK: Senator, long-term gas shortfalls forecast across the country from 2027 without more investment in supply. Is that investment coming? Do you have visibility on that?

JENNY MCALLISTER: I think I made the point at the beginning that an orderly and well-regulated market system is really important to consumers. The report that's out today is actually part of the ordinary processes of the market. It's called a statement of opportunities because it's a signal to investors and to project proponents about where the opportunities lie and when they'll come online. And so, it's incredibly important that a report comes out today in 2023, signalling that in four years’ time we might need either extra supply or extra transport or other kinds of market interventions, because it gives a signal to all of the market participants to start thinking about their investment plans and how they're going to respond to that forecast.

ANDY PARK: It also gives the signal to the Greens that there are no new coal and gas projects - probably off the table. How do you respond?

JENNY MCALLISTER: It's really important to remind the Parliament that it would be irresponsible to rule out new gas projects. We have a very ambitious target for our renewables. We expect that under our 43 per cent target we'll hit 82 per cent renewables by 2030. But that's not 100 per cent. We'll still have 18 per cent of our energy supply that's reliant on other kinds of fuels and gas will be part of that. It's not the time to be saying no new gas projects as the Greens have asked us to do.

ANDY PARK: The regulator said a potential solution for long term supply issues could be to push ahead with the development of an import terminal at Port Kembla or something that's been long mooted, which could serve as a kind of feeding point for gas to the south. Is that on the table?

JENNY MCALLISTER: Look, there are a number of ways of increasing supply and for getting the gas to where it's needed, and a number of those are flagged in the report today. I think one of the most important things is that AEMO's report today echoes the ACCC's findings that the LNG companies up north do need to supply more gas to domestic customers to prevent supply shortfalls. The way that they do that, I think, is a matter for discussion. Import terminals could play a role and that's clear in the report. But there are also other options to address medium term supply pressures.

ANDY PARK: Well, certainly Port Kembla sounds like it could be pretty busy in the future. If you just join me. You're listening to Assistant Climate Change and Energy Minister Jenny McAllister here on RN Drive. It's 23 minutes past five. The Australian Petroleum Production and Exploration Association claims market intervention and price regulation permitting delays and state-based barriers to new gas developments are exacerbating the risk of shortfalls. Is the federal government's intervention affecting supply?

JENNY MCALLISTER: Look, the Federal Government's intervention was carefully calibrated to be short term and provide a short-term intervention into a market that was presenting some very serious challenges for Australian consumers and gas users. We want Australian gas companies and our gas producers to get a fair profit and a good healthy return on their investments. But we don't want them to make exorbitant profits off the back of a very high international price coming out of the Ukraine War. That actually isn't fair on Australian consumers. It's not the right thing for the Australian economy. And we're very confident that we needed to make the intervention that we did.

ANDY PARK: And why not a super profits tax?

JENNY MCALLISTER: Well, we chose the intervention that we did as a short-term approach to ensuring supply for consumers at a reasonable price. That was the overarching objective for us. We're also in a longer-term discussion about restoring some of the conditions in the market that would allow for fair contracting between producers and consumers in the Australian gas market. That's consistent with the advice that we're receiving from the ACCC. And I will say that it's an issue that's been flagged long before we got into government. It's just that our government is taking steps to address it.

ANDY PARK: We'll have to leave it there. Assistant Climate Change and Energy Minister Jenny McAllister. I do appreciate your time this afternoon.

JENNY MCALLISTER: Thanks for having me on, Andy.