The Victorian Liberal Nationals Coalition Plan For

Energy and Resources

THE LIBERAL NATIONALS COALITION PLAN FOR ENERGY AND RESOURCES Victoria has benefited greatly from the open, flexible and competitive energy market established by the previous Government. Labor opposed those reforms every step of the way while they were in opposition, but now praise the virtues of choice, competition and the private sector. Victoria now faces new energy challenges on which the Labor Government has failed to act, including the need to avoid the threat of increasing blackouts, secure new generating plant and upgrade the reliability of electricity transmission and distribution, while ensuring a transition to cleaner coal generation as speedily as possible, alongside development of the greatest practicable use of renewable and other lower emission energy sources. The Liberal Nationals Coalition is committed to providing an affordable, reliable and sustainable energy supply for Victorians and to foster the efficient and responsible operation of Victoria’s earth resource sectors. Ted Baillieu | Leader Michael O’Brien Victorian Liberal Nationals Coalition Shadow Minister for Energy and Resources

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LABOR’S FAILINGS Eleven years of the Labor Government have seen:

A comprehensive failure by the Labor Government to keep their 1999 election pledge to “guarantee reliable supplies of gas, water and electricity.”

Five years in a row of statewide blackouts.

A failure to ensure transmission and distribution reliability to cope with “extreme weather” events.

A growing risk of more future blackouts due to inadequate investment in new power generation.

Failure to properly protect power stations and other critical energy infrastructure against unauthorised entry or attack by environmental extremists, criminals or terrorists.

Victoria’s vital Latrobe Valley power supplies and economic future under threat due to State Labor failing to stand up for Victoria over the Federal Labor Government’s bungled emissions trading scheme.

Inaction on expert reports on how to reduce blackouts, speed up restoration of supply, make it easier for consumers to report blackouts and keep consumers informed about progress on supply restoration.

Cover-up of the damning expert report on the April 2008 windstorms and blackouts, action which may have helped save lives in the February 2009 bushfires.

Failure to act on Auditor-General recommendations about improving the bushfire safety of power lines.

A bungled, over-budget roll-out of new electricity “smart” meters that should have allowed customers to better manage their electricity use and greenhouse emissions but has only delivered significant cost increases to the electricity bills of Victorian families and businesses.

Legislation that requires electricity retailers to offer a “fair” feed-in tariff to any customer who supplies feed-in power to the grid, but there is no clear specification of what a “fair” tariff is, and a complex and bureaucratic oversight arrangements have deterred the widespread uptake of this scheme.

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Introduction of a Premium Solar Feed In Tariff scheme that while paying a seemingly high 60 cents a kilowatt hour for electricity fed into the grid, imposes so many limitations on the scheme that makes it of limited benefit. Other issues include:

o The tariff is limited to a household's net feed-in of electricity.

o It only applies to a principal place of residence.

o No requirement for the customer to be paid for the electricity they feed in; they can only earn a credit to be offset against future electricity bills.

o Unused credits are extinguished every 12 months.

o Unused credits are extinguished if the customer changes retailer.

Millions of dollars spent on a “black balloons” advertising campaign that has failed to provide Victorians with the practical information they need to increase their energy efficiency.

Continued unnecessary red tape and delays making life harder for small prospectors and large scale miners alike.

Release of a glossy but ultimately empty position paper “Victoria’s Energy Future” that was vacuous, late and out of date.

A Climate Change White Paper that sets significant targets concerning greenhouse gas emissions reduction without providing the necessary roadmap to explain how the reductions are to be achieved nor explaining what the impact will be on family energy bills.

Despite Labor’s commitment in 2002 to have a minimum of 10 per cent of Victoria’s energy generation capacity using renewable sources by 2010, renewable energy still accounts for only five per cent of Victoria’s energy generation, the same as in 2000.

Labor have failed to deliver even half of their promise on wind energy. In 2002 they stated that their policies would deliver 1000MW of wind capacity by 2006. At the end of October 2010 there was only 427.7MW of wind capacity in Victoria, and the planning process authorised by Labor has divided regional Victorian communities.

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UNDER A LIBERAL NATIONALS COALITION GOVERNMENT: MANAGING THE LATROBE VALLEY TRANSITION A Liberal Nationals Coalition Government will:

Invest $30 million into the Latrobe Valley Industry and Employment Roadmap, with $5 million from the Liberal Nationals Coalition’s Regional Growth Fund in addition to the existing $25 million Latrobe Valley Advantage Fund.

Fight for the Federal Government to provide transitional

arrangements for Victoria’s Latrobe Valley generators to ensure our on-going security of supply.

Clear the way so that rapid future investment in new lower-

emission base generation capacity can proceed once uncertainty over Federal Labor’s emissions trading scheme or alternative measures is resolved.

Work with the Federal Government, industry and the local community to facilitate the phased transition from high-emission coal-fired electricity generators to lower impact generation.

Establish, in consultation with industry, a program to identify

potential sites for new power plants, and to resolve as many planning, fuel source, infrastructure and other logistical issues as possible in advance.

Introduce tough penalties for any unauthorised entry to power stations and other critical electricity infrastructure and ensure that electricity companies have sufficient security measures in place.

Work with all segments of the Latrobe Valley community to ensure

the Valley continues to thrive despite the challenges posed by responses to climate change.

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With brown coal generation providing well over 90 per cent of Victoria’s electricity consumption (and the Hazelwood facility providing approximately 23 per cent), the transition from our historic reliance on coal to a greater use of gas and renewable electricity must occur in a phased manner so as to ensure that Victoria’s security of supply is maintained. In March 2010 the Australian Bureau of Agricultural and Resource Economics (ABARE) forecast that for the period 2007-08 to 2029-30, electricity generation in Victoria will have the lowest average annual growth of any state or territory at just 0.9 per cent compared to a national average of 1.8 per cent, despite increasing energy demands. To avoid Victoria becoming dependent on other states’ electricity generation, greater capacity will need to be built here. Victorians rightly expect that in regulating the energy sector, the State Government will ensure that the lights stay on. It is therefore essential that Victoria actively engage with the Federal Government on the shape of any national energy policies that will affect Victoria’s generation capacity. A national approach to climate change involving limiting greenhouse gas (GhG) emissions must not require Victorians to shoulder an unfair share of the burden. A Liberal Nationals Coalition Government will work with the Federal Government and industry to facilitate the rebalancing of Victoria’s energy generation portfolio from our reliance on high-impact brown coal-fired generators, such as Hazelwood, to lower-impact alternatives including clean coal, gas and renewables. While the new power plants will be constructed by the private sector, the Victorian government needs to do all it can to facilitate and speed up the process for investment in new power plants to proceed as soon as possible.

The Labor Government stood by this year while TRUenergy shelved plans to construct a 1000MW gas-fired power plant at Yallourn until 2015, postponing the transition from coal to gas-fired generation by at least two years. New gas fired plants, drawing fuel from the recent discoveries of large additional gas reserves around Australia, will be crucial in order to replace the electricity generated by coal fired plants that may face closure under any national emissions limitation scheme or similar measure. Victoria’s power plants and key transmission and distribution facilities are vital state infrastructure. This makes them potential targets for terrorist attacks.

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They have already been targets for environmental extremists who have invaded power stations, placing at risk their own lives and the safety of power plant workers, as well as threatening generator shutdowns that would cause power shortages costing the state millions of dollars. While people have the right to peaceful and lawful protest, they do not have the right to use violence to attack other people’s property and put the vast majority of Victoria’s electricity supply at risk. A Liberal Nationals Coalition Government will ensure that power company risk management plans are fully up-to-date and co-ordinated with police and other emergency services. We will also ensure that standard security measures and protocols are developed across the power industry, and that the capability of power companies and emergency services to actually implement these plans is independently audited. We will also facilitate the necessary planning and other approvals and co-operation by government agencies for power companies to undertake appropriate and reasonable security upgrades to protect against terrorism, extremist invasions and criminal activity.

A Liberal Nationals Coalition Government will also ensure there are clear offences with tough penalties for those who invade vital infrastructure and put the safety of workers and the security of the state’s power supplies at risk. RELIABLE POWER DISTRIBUTION A Liberal Nationals Coalition Government will:

Act to increase the reliability of Victoria’s power supply system

and ensure that when unscheduled blackouts occur Victorians can get the information they need.

Work with regulators to set service standards that require:

o clear information to be provided to consumers by retailers

and distributors about what contact points can be used to report faults and to obtain information about likely supply restoration time;

o power companies to allow customers to use their home,

business or mobile phone number as a single, readily remembered reference number when they contact the power company about faults or updates;

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o power companies to provide a fault reporting and update service that will allow fault and restoration information to be made available by SMSing the simplified customer reference number; and

o establishment of a single “portal” that channels calls, SMS

messages, emails and web site inquiries directly to the relevant power company using the customer’s reference number.

Reduce the impact of blackouts by harnessing stand-by

generation, and promoting national rules that facilitate use of customers’ stand-by generating plants to help meet peak energy.

Work with regulators and industry to establish an incentive-based

scheme for large-scale energy users to voluntarily reduce usage at key times to support the maintenance of supply.

Work with national electricity regulators to ensure that:

o a comprehensive assessment is developed into the effect of

changing weather patterns and likely future “extreme weather” events on the reliability of Victoria’s power supply;

o the reliability standards and requirements to be met by

power companies are revised accordingly; and

o any necessary progressive infrastructure strengthening is allowed for in the power companies’ funding arrangements.

Over the last five years, Victoria has suffered major blackouts each year. In February 2005 storms took 410,000 Victorians off supply. In January 2006 high temperatures and storms caused 618,000 supply interruptions. In 2007 a bushfire forced rolling power shutdowns across the state. In April 2008 storms took 420,000 Victorians off supply, many of them for days on end. In January 2009 breakdowns in distribution and transmission and problems with the Basslink interconnect caused power supply loss more than 500,000 Victorians.

Throughout this series of increasing problems there has been chronic neglect and inaction by the Labor Government.

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Following these events the Essential Services Commission has called for improved customer call centre management, increased use of non-operational staff, better information provision, standardisation of emergency response levels, better media communications, alternative communications mechanisms such as the use of SMS messages, more effective use of local radio and television stations and better coordination with other emergency services. The Labor Government has failed to act on those recommendations.

Blackouts can occur for two different reasons. The first is when a physical fault cuts off all supply to an area. The second is when lack of generation or a transmission fault means there is not enough electricity to supply all customers. With the first type of blackout, what needs to be done is fix the fault and/or find an alternative way to route power to the affected customers. Power cannot be restored until that is done. However, with the second type of blackout, there is much that can and should be done to minimise the extent of the blackout. Under the Labor Government, blackouts have been more disruptive than they needed to be, because Labor has failed to put in place the necessary rules, technology and arrangements to reduce the extent of blackouts required, protect vulnerable users, share the remaining burden more fairly, and keep customers informed about what is going on.

Across Victoria, many large electricity customers have stand-by generation plants to ensure their factory, office or other facility will continue to have power in a blackout.

If a blackout hits that customer’s area, the customer will need that stand-by generation plant for their own use. When there is a blackout in some parts of the state the standby generation plants in other parts lie idle and unused.

Each of these plants individually has only a small output, but collectively they have the ability to make a significant contribution to Victoria’s power supply needs in a time of power supply breakdown.

A Liberal Nationals Government will work with regulators to establish a regimen where customers with stand-by generation plants that they don’t need for their own immediate purposes can sign up to have their generation plant used to supply power into the grid in times when there is a major power supply breakdown. Those customers will be able to receive an annual fee for allowing their generation plants to be available for this use, and a further payment for any power they supply in times of supply breakdown.

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In addition, there are large industrial energy users that can reduce their demand in the event of a major power supply breakdown. This can relieve pressure on the grid. Reducing demand to reduce the impact of supply constraints (known as “negawatts”) is a form of demand management that has been underutilised under Labor. The more customers who can be signed up to these programs, the smaller the impact of any blackouts will be for families and community facilities, as well as for farms and businesses with time-critical operations that cannot afford to be off supply. A Liberal Nationals Coalition Government will ensure that where there is sufficient notice of a looming power shortage that threatens blackouts, mandatory power restrictions will be activated so that blackouts can be avoided. Where applicable, these mandatory restrictions will be time limited, for example so that they apply only during time of afternoon peak demand, to limit their burden. Where unexpected blackouts occur and supply cannot be restored quickly, a Liberal Nationals Coalition Government will work with regulators so that rolling blackouts are shared fairly around the state, and that advance notice of scheduled blackouts is widely released as far in advance as possible.

In particular, advance notice will wherever possible be given to radio stations and other media outlets, as well as published on the internet, so that families, community organisations, farms and businesses know of an impending blackout in advance and can make preparations accordingly. When the power goes off – at home, on the farm, or in a factory or business – consumers want to know that the power company is aware of the blackout and is acting to fix it. They also want to know when the power is likely to be restored and are entitled to expect that this will be done as quickly as is reasonably possible. Without electricity many of the usual means of communication, including television, modern home telephones, email and web sites are lost. With the lights out at night, it is also not easy to scramble to find accounts or other documents which give unfamiliar phone numbers or account numbers. A Liberal Nationals Coalition Government will require power companies to provide clear information for consumers on faults and obtain updates on supply restoration by phone. We will also work towards simplifying this process through the potential use of a single universal reference number such as their home or mobile phone number as well as proving access through SMS, email or the internet.

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PREVENTING BUSHFIRES: SAFER ELECTRICITY ASSETS A Liberal Nationals Coalition Government will:

Create a $50 million fund to begin crucial work to reduce the

number of bushfires started by ageing electricity assets. Five of the major fires that started on Black Saturday were caused by the failure of ageing electricity assets. Among these was the Kilmore East fire which led to the deaths of 119 people. The Bushfires Royal Commission has emphasised that the failure of electricity assets has been one of the primary causes of catastrophic fires in Victoria during the past 40 years. This is only set to get worse as components of the distribution network pass the end of their engineering lives. The Commission has recommended swift and decisive action to replace ageing electricity infrastructure with safer technologies that deliver a greatly reduced bushfire risk. This amounts to a major call to action yet the Labor Government’s response has been to announce a taskforce. It will take almost a year before this taskforce provides its final report. By stark contrast, the Liberal Nationals Coalition will immediately begin work to replace the most dangerous electricity assets in Victoria. We take the view that the replacement of these ageing assets is unavoidable and that action should be taken as a matter of priority to avert the loss of more lives in fires caused by their failure. Unlike the Labor Government we will not leave it up to electricity distributors and households to fund this important work. We will get the ball rolling with the creation of a $50 million fund to replace distribution assets in the areas of highest bushfire risk. Following this it is anticipated that additional funding will be made available to continue the 10-year work program recommended by the Royal Commission. Only the Liberal Nationals Coalition will act to provide safer electricity assets to help prevent deadly bushfires. This initiative is funded in our Bushfire Response policy. FEED-IN-TARIFFS A Liberal Nationals Coalition Government will:

Strongly support feed-in tariffs that provide a fair reward and encourage the supply of renewable and low emissions energy into the grid.

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Direct the Victorian Competition and Efficiency Commission (VCEC) to inquire into and report on the design and implementation of a market-based gross feed-in tariff scheme.

Ask VCEC to examine the following possible features of a market-based gross feed-in tariff scheme:

o A requirement for electricity retailers to include in every retail

contract an offer to purchase all power generated by a customer’s feed-in facility.

o The tariff available to all solar, wind, fuel cell and other lower

emission sources.

o The retailer to pay the customer at the end of each normal billing period any amount earned by a customer from the feed-in.

o Providing that customers can be paid in cash, not just in

credits that are wiped out if not used.

o Providing that customers feeding in to the grid at times of peak demand can access the higher prices that are available at such times.

o Offer the potential for payment of a higher rate where the

transmission and distribution savings are greatest, such as in regional Victoria.

o Apply to feed-in sources installed anywhere, including

businesses, farms, community organisations and all residential premises - even vacant land so long as there is a connection point.

o Require no hidden cross-subsidy from other consumers.

The way in which Labor has structured its net feed-in tariff has failed to adequately promote the adoption of solar and other renewable forms of distributed generation. Government should work to ensure that ordinary consumers, businesses, farmers and community organisations can receive the full social value of their contributions when they play their part in contributing energy sources that help reduce our nation’s GhG emissions.

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For electricity supply, this may involve market reform so that anyone who feeds electricity into the grid, and not just commercial scale generators, will be able to receive the full value of the power they contribute.

There is significant community support to provide separately for the feed-in of power to the grid and the drawing of power out of the grid. Under a gross feed-in tariff, any source feeding into the grid would be able to earn a price based on the value of the total amount of power fed in, determined on a basis that is fair and straightforward. The price the customer pays for any power they purchase and draw out of the grid would then be determined separately. The experience of other jurisdictions, such as New South Wales, is that a poorly designed gross feed-in tariff can have considerable economic consequences that distort the electricity market, does not deliver value for money in terms of GhG emission reductions and is not sustainable in the longer term. For this reason, the Liberal Nationals Coalition will have VCEC conduct an inquiry into the features that a market-based gross feed-in tariff scheme should have, with a focus on promoting the take up of lower emission generation and ensuring economic responsibility and sustainability. It is proposed that the current “premium” net feed-in tariff scheme will remain in place as an additional option for the time being. Retailers will also be able to continue to offer a “one for one” or other feed-in tariff under the existing “fair” tariff requirements. WIND FARMS A Liberal Nationals Coalition Government will:

Support wind farms in appropriate locations.

Support the advance identification of suitable sites for wind farms and facilitation of planning processes.

Restore fairness and certainty to the planning system for wind

farms and will ensure:

o that the placement of turbines will be no less than two kilometres from the nearest home unless a contract between the resident and wind farm developer is agreed;

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o the reinstatement of local government as the planning authority for wind farm applications;

o the establishment of a shared payment system for

landowners whose properties are within one kilometre of the nearest turbine, as a compensation mechanism for adjacent landholders;

o the establishment of ‘no-go’ zones for wind farms at places

such as Wilson’s Promontory, the Mornington and Bellarine Peninsulas, Surf Coast and Great Ocean Road regions, McHarg and Macedon Ranges, Dandenong and Yarra Ranges and sections of the Bass Coast;

o the exclusion of wind farms in or near national and state

parks, designated tourist areas and designated regional population growth corridors; and

o the public availability of all data on the energy output of

wind farms.

It is time to give local communities the key role in deciding where wind farms will go and restore fairness and certainty to the planning process for wind farms. A Liberal Nationals Coalition Government will also establish new guidelines relating to the construction and operation of wind energy facilities to monitor noise and strobe lighting impacts on nearby residents, as well as shadow flicker and bird kills at wind farm sites. The Liberal Nationals Coalition supports the development of the renewable energy sector as an important contributor to the sustainable delivery of Victoria’s future energy needs. The Liberal Nationals Coalition wind energy plan will provide certainty to operators and communities. It will minimise the effect of wind farms on our natural environment and ensure that our coastal landscapes are protected.

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CLEANER COAL A Liberal Nationals Coalition Government will:

Actively promote research and development in technology to reduce emissions from coal-fired generation and encourage the development of carbon capture and storage.

Commit to promoting the development of Victoria as a CCS hub,

including confirming the continuation of the $30 million CarbonNet project.

Introduce a restriction on new approvals for coal-fired power

stations that would exceed a target emission level of 0.8 tonnes of CO2 per megawatt hour.

Work with the Federal Government to ensure that Victoria has

access to its fair share of federal funding for the development of cleaner coal technology, CCS and geosequestration.

Coal-fired electricity generation has been a bedrock of Victoria’s competitive advantage for decades, providing relatively cheap and reliable baseload power.

Measures dealing with climate change will require a rebalancing of Victoria’s energy generation portfolio towards lower emission sources, but Victoria’s dependence on coal-fired generation cannot be changed overnight.

As well as encouraging new and emerging technologies in gas and renewables, it is important that Victoria be at the forefront of efforts to reduce the GhG impact of coal-fired generation. This will assist to secure the longer-term future of the communities within the Latrobe Valley and provide an opportunity for Victoria’s brown coal assets to continue to be used, but in a more environmentally responsible manner.

That is why a Liberal Nationals Coalition Government will actively promote cleaner coal technology including retrofitting of existing coal-fired generators, the further development of CCS and geosequestration and restricting the development of new coal-fired generators to those meeting emission target levels that the Coalition agreed to in the Climate Change Bill.

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A Liberal Nationals Coalition Government will also stand up for the interests of the Latrobe Valley communities that have an important economic stake in the future of lower emission coal-fired generation, as well as the broader Victoria community that depends on Latrobe Valley generators for reliable electricity at an affordable price.

Unlike Labor, a Liberal Nationals Coalition Government will unambiguously stand up to any Federal government policy proposal that will disproportionately impact on Victoria or communities within it. Climate change poses challenges that cross state and national borders. Victorians cannot be expected to shoulder a disproportionate share of the burden in any policy responses to climate change that come from Canberra.

RENEWABLE AND LOW EMISSION ENERGY PROJECTS A Liberal Nationals Coalition Government will:

Double to $82 million the Energy Technology Innovation Strategy (ETIS) competitive grant funding available for pilot renewable energy plants and technology projects, and extend eligibility to low emission technology such as fuel cells, co-generation and tri-generation.

Provide $100 million to the TRUenergy Large Scale Solar Power

station near Mildura, subject to Federal funding, as well as the remainder of the $50 million to Silex for their solar energy plant as required under agreement, and advocate for additional grant funding from the Commonwealth’s Solar Flagship program.

Maintain other levels of grant funding for research, development

and commercialisation of renewable energy projects and ensure that all forms of renewable energy are eligible to access grant funding. In particular, we will ensure that smaller-scale projects using innovative technology are eligible for funding.

Work with local governments, building owners and estate

developers seeking to develop and install co-generation and tri-generation plants.

Encourage and facilitate further Victorian-based research into and

trials of the use of algae to reduce greenhouse emissions. We will make clear that grant rules allow algae-based technologies to apply for funding.

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Promote the development of solar power generation with the aim of securing 5 per cent of Victoria’s energy generation from solar power by 2020.

Work with proponents of renewable generation projects to ensure that Victoria receives its fair share of Federal government funding available for the promotion of lower emission generation.

Review the timing of government support for low emission project milestones to ensure that funding is available at the most appropriate and critical time to facilitate viable developments.

Promote better consumer understanding of the issues involved with the installation of solar PV generation.

Labor recently reallocated $41 million in uncommitted ETIS funds to provide competitive grants for pilot renewable energy plants and technology projects. The Liberal Nationals Coalition believes that supporting a variety of renewable and low emission technology will serve Victoria’s longer term interests as we re-balance our electricity generation portfolio and that is why we will boost the funding available under the scheme to $82 million. We will also support large scale solar technology in Victoria through the current $150 million of funding commitments for nominated facilities (subject to the availability of federal funding needed to ensure project viability) and advocate on their behalf for a share of the Commonwealth’s Solar Flagship fund. In areas such as co-generation and tri-generation, Labor has barely taken any action. Co-generation and tri-generation involve buildings (or, indeed, distinct communities such as housing estates) producing electricity, hot water, space heating and (in the case of tri-generation) cooling from small gas-fired stations. In Labor’s Climate Change White Paper, the term “co-generation” was mentioned only twice (the second of which was a mere repeat of the first mention). As co-generation utilises the waste heat from electricity generation to provide hot water and space heating, it is a much more efficient form of energy generation and has greatly reduced GhG emissions for the same energy demand, especially compared to brown-coal generated electricity. It also supports energy security as the generation takes place on-site, removing the building’s reliance on the electricity grid and increasing energy efficiency by reducing transmission losses.

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Co-generation and tri-generation plants have been deployed across the London borough of Woking, while Sydney is increasing its use of this technology. In addition to extending eligibility for pilot program grants to co-generation and tri-generation, a Liberal Nationals Coalition Government will take steps to address regulatory barriers that inhibit the take up and economic viability of this technology in Victoria. A Liberal Nationals Coalition Government will also review the timing of government support for low emission project milestones to ensure that funding is available at the most appropriate and critical time to facilitate viable developments, while protecting the interests of Victorian taxpayers. Many Victorians have made the decision to invest in solar panels for their homes, to reduce their dependency on grid electricity and to make their personal contribution to lowering greenhouse gas emissions. However, Labor’s failure to explain to Victorians the potential consequences of such a decision – including the potential loss of off-peak electricity rates - has meant thousands of Victorians have been left disillusioned and out of pocket. Labor’s incompetence has meant that Victorians who have paid thousands of dollars out of their savings to help the environment by going solar have been caught unaware that their decision may lead to higher electricity bills, thereby undermining community support for domestic solar generation. A Liberal Nationals Coalition Government will provide practical information that explains to Victorians all relevant information about switching to solar so that consumers can make a fully informed choice. ENERGY EFFICIENCY A Liberal Nationals Coalition Government will:

Provide practical energy efficiency and emissions reduction advice for households and small business.

Ensure that the Victorian Energy Efficiency Target (VEET) scheme

has in place safeguards to prevent rorting which undermines efforts to deliver energy efficiency.

Support the extension of the Energy Saver Incentive to small and medium enterprises (SMEs).

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Continue grant eligibility for other energy projects seeking to achieve lower emissions or enhanced energy efficiency, such as use of fuel cell technology.

Maintain energy efficiency rebate schemes, public housing and

low income energy efficiency programs. Require government departments and agencies to implement and

report annually on a comprehensive range of benchmarks for their energy use and efficiency, in accordance with guidelines to be set by the Minister for Finance as part of the whole-of-government performance measurement regime.

The Labor Government’s “help” for families and businesses to boost their energy efficiency has largely rested on little more than its “black balloons” advertising campaign. Most families and businesses already want to do the right thing with energy conservation, and don’t need more awareness raising advertising. What they need is better practical information and advice on what they can actually do about energy conservation. What technologies are currently available and usable? What are they likely to cost? What can be done on a limited budget? What can be incorporated into an extension or renovation? Which professionals, tradespersons and retailers have skills and experience in energy-efficient products and services? A Liberal Nationals Coalition Government will re-orient the Labor Government’s energy efficiency promotion programs so as to make available practical, useful advice and information on energy efficiency to Victorian families and businesses. This will include an opportunity for individual inventors, manufacturers and suppliers to showcase their products and capabilities in a forum and format focused on facts rather than sales pitches.

Where applicable, we will work with industry associations to ensure consumers can find the information they need about improving their energy efficiency seamlessly and without duplication. A Liberal Nationals Coalition Government will extend the Energy Saver Incentive to SMEs, as many such enterprises can contribute to energy efficiency which benefits their bottom line as well as delivering better energy and environmental outcomes for the state. We will also put in place appropriate protocols to deal with widespread concerns regarding rorting of measures under the Victorian Energy Efficiency

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Target scheme whereby credits are claimed for activities that have not in fact taken place. Government as a major energy user can both set an example and reduce costs to taxpayers through responsible use of energy.

SMART METERS A Liberal Nationals Coalition Government will:

Implement the Auditor-General’s recommendation to ensure that a proper cost-benefit analysis of the smart meter project is undertaken and determine whether the rollout should be suspended during such an analysis.

Revise the technical specifications and cost recovery regulations

of the smart meter project to ensure that the technology is appropriate and the cost impact on Victorian households and business is minimised.

Implement the Auditor-General’s recommendation to commission

a program review by the Gateway Unit of the Department of Treasury and Finance on governance and implementation of the smart meter program to date.

Introduce regulations dealing with the use of information gathered from smart meters to ensure the private information of consumers is appropriately protected.

The Labor Government’s roll-out of so-called “smart” meters to 2.5 million homes and businesses across Victoria has been a disaster. Unlike other states, such as Western Australia, which have proceeded carefully with trials of smart meter technology, the Victorian Labor Government has blundered ahead at huge cost to electricity users. From 2010 every Victorian household and the vast majority of businesses are paying for smart meters via higher electricity bills, whether or not they have a smart meter installed. The extra cost of smart meters appearing on families electricity bills ranges up to $107 in 2010, with higher charges to apply in 2011.

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Once a smart meter is eventually installed, it still won’t work as the Government has promised. Without an in-home display unit or similar device to display the real time electricity usage information consumers will not be able to adjust their usage to save them money and reduce their greenhouse gas emissions. These devices may not be available for some time and the cost is yet to be determined. The Auditor-General found that the original project cost of $800 million has blown out to as much as $2.25 billion – every cent of which will be paid for by Victorian electricity users through higher bills. This cost blow out has been exacerbated by the Labor Government’s panicked decision to impose a moratorium on time-of-use pricing until after the 2010 election, which distribution businesses have confirmed will add millions of dollars to the project cost. The Auditor-General also found “the merits of the economic case for the project are quite uncertain” and “it is…possible that there will be an inequitable…transfer of economic benefits from consumers to industry”. This led to the Auditor-General recommending that the Government “re-assess the economic viability of the AMI project by updating the cost-benefit analysis to reflect existing and emerging risks as well as the impact of changes to scope and underlying assumptions. The Labor Government’s cost-benefit analyses to date have proven to be wholly unreliable. A Liberal Nationals Coalition Government will implement the Auditor-General’s recommendation by ensuring that a full, independent cost-benefit analysis of the smart meter program is conducted. Given the serious doubts over the economic case for the project, Victorian families deserve to know if continuing with the project in its current form will amount to throwing good money after bad. To that end, the cost-benefit analysis will examine what changes should be made to the project (including any amendments to technical specifications and cost recovery procedures) to ensure that the project will represent appropriate value for Victorian electricity users. A Liberal Nationals Coalition Government will not support gold-plating of electricity networks through the smart meters project at the expense of Victorian families.

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The Liberal Nationals Coalition will determine whether the rollout of the program should be suspended during the conduct of an independent cost-benefit analysis following an assessment of the impact on consumers of a suspension. We will also implement the Auditor-General’s recommendation to commission a program review by the Gateway Unit of the Department of Treasury and Finance on governance and implementation of the smart meter program to date. This recommendation was rejected by the Labor Government in an attempt to cover up the shocking mismanagement of this project to date. Serious concerns about the potential use of data collected by smart meters that could compromise the privacy of individuals have been identified by the Privacy Commissioner. A Liberal Nationals Coalition Government will work with industry, consumer groups and the Privacy Commissioner to develop appropriate regulation to ensure that the personal information about the activities of individuals in their homes that may be identified by smart meter data is treated with the appropriate confidentiality. A Liberal Nationals Coalition Government will also work urgently with other governments and industry participants to promote access to technology that will give customers the ability to monitor and manage their power use and greenhouse emissions as soon as possible at an affordable price. RETAIL COMPETITION AND MARKETING A Liberal Nationals Coalition Government will:

Continue to support full retail competition in the Victorian energy market as being the best way to keep downward pressure on electricity and gas prices at the retail level.

Work with regulators, industry and consumer groups to ensure

that the public is educated to understand their rights and responsibilities in entering into or changing retail energy arrangements and that retailers observe consumer protection laws in their marketing arrangements.

Encourage better community understanding of the factors that affect energy prices and options available to consumers to reduce their energy use and resulting bills.

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A dynamic, competitive and efficient energy market benefits its customers. That has been the experience of the major industry reform undertaken in the 1990s by the previous government. Since that time the introduction of full retail competition has been embraced by Victorian energy customers who have elected to shop around for a better deal from their electricity and gas retailers. In 2009 Victoria recorded a combined switch rate (electricity and gas) of 26.3 per cent - the highest recorded in the world for a fully contestable market. The Liberal Nationals Coalition remains strongly supportive of our competitive retail market. However, concerning instances of sharp practice or misleading conduct in the marketing of gas and electricity retail offers continue to be reported. These not only affect the customers concerned, but undermine public confidence in the market. A Liberal Nationals Coalition Government will work with regulators, industry groups and consumer groups to promote the education of consumers and best practice in retail energy marketing. We will also promote better understanding of the reasons for fluctuations in energy prices and the practical measures that consumers can take to cut their energy use and their bills. REGULATION A Liberal Nationals Coalition Government will:

Fight the risk of growing bureaucracy and unaccountability in national energy market regulation.

A Liberal Nationals Coalition Government will give high priority to simplicity, clarity and speedy decision-making in the design of the national energy market. We will push for comprehensive, published benchmarks and performance indicators for all aspects of the national energy market – not just technical measures of market performance, but measures of the timeliness and quality of political and bureaucratic decision-making.

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A Liberal Nationals Coalition Government will also strive to establish clear lines of political accountability for decision-making in the national energy market and regulatory structure, to avoid the development of a bureaucracy answerable to no-one and a Ministerial Council that allows individual governments to deny responsibility. IDENTIFYING BARRIERS TO LOW EMISSION GENERATION A Liberal Nationals Coalition Government will:

Commission the Victorian Competition and Efficiency Commission (VCEC) to identify and report on regulatory and other barriers to the development of a network of distributed renewable and gas-fired electricity. This report will examine:

o regulatory barriers inhibiting the take up of co-generation and

tri-generation in Victoria; and

o the consumer price consequences of different generation types to give Victorian households, businesses and policymakers a better understanding of the likely cost impacts of rebalancing generation towards lower emission sources

The Commissioner for Environmental Sustainability has previously recommended such a study as a valuable tool to assist Victoria to meet its growing energy demand from lower-emission generation sources, a recommendation which the government has failed to support fully. Victoria’s historical and current reliance of brown coal-fired generation means that the barriers to re-balancing Victoria’s energy portfolio towards lower emission sources such as gas and renewables are significant. Labor’s time in government has been marked by piecemeal policy on the run responses. The Liberal Nationals Coalition will undertake a thorough and systematic examination of the regulatory and other barriers faced by lower emission technologies and use the results to promote the adoption of lower emission technology at the most efficient price outcome for consumers. VCEC will be asked to identify regulatory barriers inhibiting the take up of technology such as co-generation and tri-generation in Victoria and to recommend what action needs to occur to remove such barriers. EC’s examination will also focus on the cost impacts that different generation sources will have on household and business power bills to help improve

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community understanding of the likely consequences of shifting to a lower emission generation mix. Importantly, policymakers will have better access to data that will help to ensure that taxpayer funded lower emission generation subsidies are directed to the most efficient and effective generation forms to ensure that taxpayers receive maximum value for money. NATURAL GAS FOR REGIONAL VICTORIA A Liberal Nationals Coalition Government will:

Establish a $100 million Energy for the Regions program to

leverage natural gas expansion across regional Victoria. For many in regional Victoria, a lack of energy choices forces them to use expensive LPG or electricity for cooking, hot water and heating. In winter, many families use at least two bottles of LPG per month for heating. Because of the expense, low income families and pensioners in regional Victoria often ration or even go without winter heating. Households with reticulated natural gas can save in the vicinity of $600 and $1200 a year in energy costs. Moreover, the availability of natural gas will facilitate a substitution from GhG intensive grid electricity, delivering important environmental benefits to the community as a whole. The Energy for the Regions program will deliver $100 million over four years to help expand natural gas to communities across regional and rural Victoria. Regional and rural councils will be able to nominate local communities to be part of the program. The funding will be available to leverage gas extensions so that communities are able to connect to this cheaper, cleaner and more reliable energy. As a start the Coalition will, subject to applications from the relevant councils, start work on delivering natural gas to an initial twelve towns including: Avoca, Lakes Entrance, Invermay, Winchelsea, Heathcote, Orbost, Warburton, Marong, Bannockburn, Terang, Maldon and Huntly. Energy for the Regions will be funded through the $1 billion Regional Growth Fund.

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MINING AND PROSPECTING A Liberal Nationals Coalition Government will:

Not impose new public land use charges on prospecting excursions organised by not-for-profit prospecting associations.

Not introduce new charges for prospecting.

Preserve the independence of the Mining Warden.

Work with industry groups to reduce the level of overlapping

regulation and bureaucracy that often confronts the minerals and resources sector.

Prioritise legislative reform to improve the effectiveness of

industry regulation.

Support investment in geoscience to facilitate investment and development in the Victorian minerals and resources sector.

Under Labor, the minerals and resources sector has suffered from too much bureaucracy, too much uncertainty and too little consultation. Respected international research organisation the Fraser Institute found that Victoria is the worst jurisdiction in Australia when it comes to government policies designed to support mineral exploration, and even lags behind jurisdictions such as Mali and Botswana. Regulatory duplication, uncertainty and inconsistency were identified as key factors holding back the responsible development of Victoria’s natural resources. The Liberal Nationals Coalition will work with the sector to improve regulation, reduce uncertainty and duplication to attract more jobs and investment to our state in the minerals and resources sector. A Liberal Nationals Coalition Government will not require individuals or not-for-profit bodies to pay licence fees for prospecting on public land or bringing prospecting groups onto public land where charges did not previously apply, unless they are carrying on those activities on a commercial basis.

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Labor’s Licensing System for Tour Operators and Activity Providers on Public Land in Victoria will introduce requirements to obtain a licence and pay a fee for a range of activities on public land. These new rules threaten to impose licence fees even on not-for-profit prospector associations and clubs if they organise prospecting excursions that involve non-club members. The sacking of the Mining Warden by the Labor Government was an attack on an independent statutory position that has responsibility for dealing with disputes to which the Government is often a party. A Liberal Nationals Coalition Government will respect the important role the Mining Warden performs and will ensure that the office is maintained and, unlike Labor, respect its independence. The Liberal Nationals Coalition will amend the powers of the Mining Warden to better facilitate the office’s capacity to resolve disputes in a streamlined, effective manner. Resource sector businesses often face overlapping regulation, including environmental, planning, Department of Primary Industries and other agency requirements. The mining and prospecting industry has expressed frustration with the failure of DPI under Labor to properly consult with stakeholders. A Liberal Nationals Coalition Government will establish a working group involving affected industry groups and regulators to review and reduce unnecessary bureaucratic overlap and ensure that DPI is required to consult with industry in a meaningful and timely way. The mining and resources industry has been seeking reform of Victoria’s outdated mining legislation to which the Labor Government has only responded with tentative amendments. A Liberal Nationals Coalition Government will prioritise the introduction of further modernisation legislation and will ensure that DPI consults with stakeholders on the detail surrounding the implementation of the changes. A Liberal Nationals Coalition Government will support the continued promotion of geoscientific data and analysis to assist industry to have access to high quality information to promote the responsible development of Victoria’s minerals and resources sector.

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TOTAL COSTINGS: Recurrent funding.

Policy 2011/12 2012/13 2013/14 2014-15 Total

Additional funding for ETIS grants

$10.25m $10.25m $10.25m $10.25m $41m

Total $10.25 m $10.25 m $10.25 m $10.25 m $41 m

Authorised by Tony Nutt, 104 Exhibition St, Melbourne VIC 3000.