Revealed: How the big energy lobby tried to use Covid-19 to derail energy market reforms

Details of a letter from a lobby group representing some of Australia’s largest energy companies, released under Freedom of Information laws, has detailed just how quickly energy market incumbents moved to use Covid-19 to lobby for delays to crucial energy market reforms and slow the clean energy transition.

While most Australians were focused on the immediate response to an outbreak of Covid-19, the Australian Energy Council was lobbying state and federal governments to argue that energy market reforms designed to support the growth of clean energy technologies should be delayed.

The lobbying efforts are detailed in a letter, dated 19 March, sent to ministers ahead of a meeting of the COAG energy council shows how quickly the energy lobby moved to use the developing Covid-19 outbreak in Australia as an opportunity to push for delays to a range of crucial energy market reforms.

The letter, which was sent to all federal and state energy ministers, has been released by the office of the minister for energy and emissions reduction Angus Taylor, following a freedom of information request.

“My members are simply not positioned to implement a raft of differing State and Federal requirements at a time of national crisis,” Australian Energy Council chief executive Sarah McNamara says in the letter. McNamara was previously an energy and climate policy advisor to prime minister Tony Abbott and is a former head of regulatory affairs for AGL.

“Resources are already stretched, and most retailers and generators operate in multiple jurisdictions so consistency is key to enabling solutions to be delivered efficiently and at lowest cost to the benefit of Australian homes and businesses.”

The Australian Energy Council called for delays to five key reforms including the introduction of five minute settlement in the NEM, the introduction of a mandatory primary frequency response rule change, the Energy Sector Consumer Data Right, and reforms to customer switching times.

The Australian Energy Council also called for a delay to the introduction of the ‘prohibiting energy market misconduct’ reforms, better known as the ‘Big Stick’ energy reforms, which threatens to break-up major energy market incumbents that misuse their market power.

“The AEC encourages Ministers to consider delaying the implementation of the listed reforms, in order for industry to husband its limited resources for more critical, operational matters, which will be of more immediate benefit for consumers,” the letter says.

“Although this letter focuses on national reform processes, we also implore Ministers to consider the impact that their own State-based regulatory reforms may have on a resource-constrained sector during this difficult time – and to reconsider any new initiatives accordingly.”

Subsequent to the letter, the Australian Energy Market Commission (AEMC) undertook consultation on proposed delay to the introduction of the five minute settlement rule change. The Australian Energy Council has also lobbied for a delay to the introduction of a wholesale demand response mechanism that was recently approved by the AEMC.

The AEMC rejected the call to delay the wholesale demand response mechanism, and opted to delay the switch to five minute settlement in the National Electricity Market by just three months, less than the six month delay requested by the Australian Energy Council. An investigation by Deloitte found now evidence that Covid-19 had delayed 5-minute preparations, apart from those that simply assumed it would be delayed.

The Energy Sector Consumer Data Right, which guarantees customers access to data held by their electricity retailer, also came into force on 1 July, without delay.

The release of the letter coincides with the release of a new research report from global consultancy Deloitte, which found that there had been negligible impact on the reliability of electricity supplies globally, during a period when the penetration of renewables increased.

In fact, Deloitte suggested that the Covid-19 pandemic will ultimately serve as an “accelerator” of the clean energy transition, suggesting that moves by big energy incumbents to delay reforms and the wider clean energy transition may just be opportunistic, rather than founded on real impacts on energy supplies.

“If there were any sort of ‘silver lining’ to the disruption created by COVID-19, it may be that it seems to have acted as a clean energy accelerator, which the current recession will likely not deter. Over the last 10 years, we’ve seen a shift in energy attitudes, preferences and pressure gradually trend toward greater climate consciousness, but these past several months of isolation seem to have strengthened and propelled that momentum further,” Deloitte principal Marlene Motyka said.

Information released under the freedom of information request included briefing materials provided to federal energy minister Angus Taylor, including that “the fuel industry is concerned about demand reduction and over-supply of stocks.”

Taylor subsequently approved changes to vehicle fuel standards to allow surplus aviation fuels to be re-processed and sold as diesel fuel.