ESB left in limbo after stalemate in 'confidential' energy ministers meeting | RenewEconomy

ESB left in limbo after stalemate in ‘confidential’ energy ministers meeting

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Energy Security Board faces uncertain future, as does policy transparency, as energy ministers meet under new ‘confidential’ national cabinet rules for first time.

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Angus Taylor at the last face-to-face meeting of energy ministers in November 2019. (AAP Image/Richard Wainwright).
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The future of the Energy Security Board remains in limbo, after the first meeting of federal, state and territory energy ministers was held under the new, secretive, ‘national cabinet’ regime that prevents ministers speaking out publicly about the meeting and requires ministers to treat them as ‘cabinet-in-confidence’.

Energy ministers convened via teleconference on Friday, their first meeting since prime minister Scott Morrison decided to abolish the COAG system, and replace it with the ‘National Federation Reform Council’ forum that has been used to coordinate Australia’s approach to the Covid-19 outbreak.

Under the new ‘national reform council’ energy ministers will continue to meet under a dedicated energy reform committee. While this new committee is largely a rebranding exercise, it will require ministers to reconstitute some agreements created under the old COAG system, in particular the ongoing existence of the Energy Security Board.

However, one significant difference under the new ‘national cabinet’ regime are the strict ‘cabinet-in-confidence’ rules that are now being enforced on ministers.

Only ministers and departmental heads will be allowed to attend the committee meetings, and will do so with a requirement to keep the meetings secret.

This will also mean that the meetings will be held without the involvement of the energy market bodies, including the Energy Security Board, which had been regular contributors to the now defunct COAG Energy Council.

It is a major loss of transparency for the energy ministers forum at the same time as the heads of AEMO, the AEMC and the AER are excluded from briefing ministers. While the previous COAG Energy Council meetings were held behind closed doors, ministers were free to publicly discuss the agenda of meetings and its decisions.

Unlike all previous COAG energy ministers meetings, no communique was issued following Friday’s meeting, leaving the decisions made by the energy ministers and even the topics discussed by ministers publicly unknown.

With ministers now bound to cabinet secrecy, the federal Coalition government and federal energy minister Angus Taylor have effectively silenced a large source of dissent against federal climate and energy policy.

It is a significant development for a forum which had become a key battleground in Australian climate and energy policy, with the federal government lagging behind the states and territories on putting in place meaningful climate change policies and targets.

Angus Taylor has already attempted to sideline state and territory energy ministers, refusing to convene a meeting of the energy council for almost a year between December 2018 and November 2019.

It leaves uncertainty around the future of the Energy Security Board, which was created by the now non-existent COAG Energy Council.

RenewEconomy understands that ministers were unable to reach an agreement about the long term future of the body which has steered much of Australia’s recent energy market reform agenda.

It is also understood that there was a move on the part of federal energy minister Angus Taylor to do away with the Energy Security Board altogether, but that this was met by resistance from state and territory energy ministers who want the Energy Security Board to continue its work.

“Victoria’s priorities going into this meeting are timely transmission investment to support renewables and new rules to provide greater reliability for the coming summer,” Victorian energy minister Lily D’Ambrosio told RenewEconomy ahead of the meeting.

“There is significant, critical work still underway by the Energy Security Board, and it’s important that the Board continue to complete that work.”

This sentiment was echoed by a number of energy market experts and investors, who issued an open letter calling for energy market reforms to remain a key priority for energy ministers ahead of Friday’s meeting.

The Energy Security Board was established under the Turnbull government and was tasked with most of the heavy lifting in designing the since abandoned National Energy Guarantee, and is led by experienced energy market adviser Kerry Schott. Since that time the Energy Security Board as driven a large amount of recent reform work within the national energy markets, including progress towards a post-2025 redesign of the National Electricity Market that is set to recognise the growing role of distributed renewables and storage systems.

The post-2025 market design is set to provide a vision for a “two-way” electricity market, allowing for greater participation of distributed energy resources and demand response measures in the energy market.

But with the future of the Energy Security Board uncertain, it is unclear whether the body will be able to deliver the outcomes of this work.

Ahead of the meeting, the Australian Energy Market Commission released the findings of its latest review of prices and liquidity in the Australian gas market. Angus Taylor said that ministers had previously committed to “mandate the public disclosure of prices for short term contracts and production costs, putting more power back in the gas buyer’s hands.”

The report, which surveyed gas market participants, found that liquidity in the gas market is improving and prices were beginning to fall as a result, but that it was still too early to determine the outcomes of reforms on the market.

The AEMC report said that it would also need to account for the impacts of Covid-19 on the gas market and that it would again assess the performance of the Australian domestic gas market when it delivers its next review in 2022.

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