More Urgency Needed to Fix Energy Bottlenecks Says BCA Submission

Australia’s major companies have called for a number of major shortfalls in the nation’s electricity network to be addressed in a submission by the Business Council to the Council of Australian Governments’ new national energy reform group.

The submission to the Energy Reform Implementation Group (ERIG) – established at the February COAG meeting to tackle long-standing energy reform barriers – notes that a national energy market had promised greater competition and lower energy prices.

But in reality, the benefits to date from reform had been limited.

The BCA submission says that, according to its Member companies, the biggest barrier to achieving these benefits is Australia’s inadequate and overloaded electricity transmission system.

The submission highlights a number of concerns for companies operating in energy-intensive industries, including:

  • lack of sufficient transmission infrastructure to enable fully functional cross-border energy trading between states, including spot trading;
  • network bottlenecks creating production, investment and planning uncertainty for major energy users;
  • general lack of information from energy authorities about future energy supply planning which is creating uncertainty around future business investment;
  • cumbersome and inconsistent regulatory arrangements governing energy markets, leading to higher regulatory and business costs for companies operating across different states; and
  • concerns around potential underinvestment in new generating capacity in New South Wales.

The submission calls for a number of reforms to Australia’s energy system, including major improvements to energy transmission networks.

It is essential to replace the current state-based, fragmented transmission planning system with a national transmission planning system.

Other recommendations in the submission include major improvement in the current regulatory benefits test for transmission investment, reforming state-owned entities to ensure increased competition, removal of state-based policies and practices that negatively affect generation investment, and reforms in the approaches to pricing.

“The Council of Australian Governments must continue to ensure the development of forward looking and coherent strategic directions for national energy market development. The contribution of ERIG to this process should be substantial” the BCA submission states.

Submission to the Energy Reform Implementation Group