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In 2005 and 2006 I had the pleasure of addressing you as the Shadow Minister for Energy, but I must say it is a far greater pleasure to be here today addressing you as the Minister in a new Australian Labor government.
It’s an exciting time to be the Minister, but it is also a very challenging time.
We have to get the policy response to climate change right because otherwise the energy sector, Australian industry and Australian consumers will pay very dearly for it.
It is about not only protecting the environment, but ensuring Australia’s continued wealth and prosperity into the future.
And as you know I have always been critical of the pace of progress towards a truly national energy market.
Now the ball is in my court to deliver the leadership to move it along more quickly – and again, to get the policy settings right for investment, competition and consumers.
You know that I have an open door policy and I want to continue to work closely with you to make sure we deliver good energy policy for the nation.
Let me first say a few things about the outlook and then I’d like to use this opportunity to listen to your concerns and priorities over the next few years.
Energy Market Reform
First let’s deal with energy market reform.
I have already chaired my first meeting of the Ministerial Council on Energy – within the first few weeks of the new government.
For me it was important to send a signal to my Ministerial colleagues – many of whom I have known through the Labor movement for many years – that the Commonwealth is serious about energy market reform and we will not slacken the pace.
We are also serious about better working relationships between the Commonwealth and the States and Territories, and meaningful reform through COAG processes to improve productivity and the efficiency of the federation.
The energy market will be a very important part of this reform agenda.
While things have been slow, the MCE has laid some solid foundations for the reform agenda in the last few years.
We now have a national regime for the economic regulation of electricity transmission and distribution networks.
The National Electricity Law and Rules were amended on the 1st of January this year to bring distribution regulation under the national arrangements, and the new National Gas Law and Rules are expected to commence on the 1st of July 2008.
Gas Market Development
The Gas Law forms part of the MCE's priority to develop a reliable, competitive and secure natural gas market.
Commencement of the Gas Law is the next plank in market reform.
The next steps in gas market reform will be based on industry-led solutions through the Gas Market Leaders Group which has been developing and implementing the national gas market development plan.
This Group has made good progress on its two MCE-endorsed transparency enhancing initiatives:
· the Bulletin Board, and
· the Short-Term Trading Market.
The design of the Bulletin Board is almost complete and I look forward to its commencement this year.
It will provide a valuable source of information and experience as work progresses on the design and implementation of a Short Term Trading Market.
When it comes to the commercial development of gas resources, that is up to the market to determine, but my job is to make sure the policy and regulatory settings are there to encourage investment in both domestic and export gas projects.
Australian Energy Market Operator (AEMO)
The Australian Energy Market Operator is on track to be established by July 2009.
I am committed to working with my Ministerial colleagues towards achieving a public-private ownership outcome with good governance arrangements and market transparency.
Good governance is a central issue in MCE reforms.
Early next month, we will determine the precise role that MCE Ministers will have in appointing the Board of the market operator.
This will allow recruitment to begin and the Board to be in place by the middle of the year. I know the Board will have its work cut out for it to be ready to start operations in mid-2009.
The ownership question will also be resolved early in March.
I know your organisation has provided senior officials with very helpful advice here.
AEMO's functions will encompass a National Transmission Planner for electricity.
At the MCE's direction, the Australian Energy Market Commission is developing a detailed plan for the implementation of this function.
This forms part of the MCE's priority to further improve the transmission network's efficiency and transparency.
This is especially important in the new carbon-constrained environment.
The successful integration of a potentially large increase in renewable energy supply, resulting from the 20 per cent Renewable Energy Target, will rely on effective transmission planning and congestion management strategies.
Smart Meters
The MCE is also working hard to achieve COAG's commitment to mandate a roll-out of smart meters where the benefits outweigh the costs.
You will be aware of the exciting new opportunities for retailers, network companies and customers that smart meters hold.
Smart meters provide new information and tools to revolutionise services and business efficiency through services like direct load control and flexible tariff options.
As many of you know, we are working hard with industry to understand the full value of these benefits compared with the underlying costs.
The MCE considered the outcomes of the first stage of the cost-benefit work last December, when it agreed to a consistent National Minimum Functionality to reduce costs across the industry.
The major outcome of this decision is that shortly we will be formalising a technical industry group to work even more closely with us to develop this detailed functionality.
We hope very soon to release a more complete second-phase report on this work and I look forward to your feedback.
Non-economic regulatory package (retail package)
The MCE continues work on the retail package.
The revised timeframes will allow for greater stakeholder consultation and consideration of the highly complex issues involved in harmonising jurisdictional policy in this area.
The MCE Standing Committee of Officials, the SCO, will be releasing its policy response to the Allens Arthur Robinson composite paper in the near future.
This will contain a number of recommendations about the harmonisation of retail and distribution functions into a national framework by April this year.
I invite you to provide your comments on this paper when the SCO calls for submissions on it shortly.
Harmonisation of technical regulation
In addition to the ongoing reforms I have just mentioned, this Government is committed to further reform.
You will be aware that in the election campaign, the ALP committed to setting up a plan to harmonise state-based technical regulation in the energy market – in particular in the areas of OH&S, planning and permits.
The process has started for implementing this commitment.
I know my Department has been discussing the scope of the work required here with you and your organisations.
Again we will be looking for industry assistance and leadership in this area, and I look forward to progressing this with you this year.
NSW Privatisation
I want to just turn to another issue of significance to the energy market, one that is obviously of interest to ESAA.
This is the Iemma Government's move towards privatisation of New South Wales' electricity assets.
Implementation of this will go a long way towards providing a more level playing field in the National Electricity Market.
Mr Iemma and his Ministerial colleagues should be applauded for their courage in tackling the issue and looking to place the operation of electricity generation and retail assets in private hands in New South Wales.
This will certainly improve efficiency in the market's operation, and pave the way for much needed investment in electricity infrastructure.
Climate Change
The emissions trading scheme is one of the most important policy issues facing the industry over the next few years.
I just want to touch on the emissions trading scheme as I know this is an issue the electricity and gas sector is keen to engage on.
The Cabinet sub-committee on Climate Change, Water and Heritage, of which I am a member, is overseeing design of the emissions trading scheme and this will be one of my top priorities.
It is crucial that we get the design right to ensure the future prosperity of the Australian energy and resources sectors.
The ETS will have important consequences for energy and energy technology policy, two areas for which I am directly responsible.
I understand that Minister Wong and her Department will shortly develop a stakeholder consultation process in cooperation with relevant portfolios.
Once again, I encourage you to continue your active involvement in this important policy development process.
Conclusion
In conclusion, I want to leave you with the message that this Government is serious about continuing energy sector reforms and putting in place national arrangements throughout the sector and I look forward to a close working relationship with you over the coming years.
Thank you.