Mr NORTHE (Morwell) (16:02:21): I rise this afternoon to speak on the Energy Legislation Amendment (Victorian Default Offer) Bill 2019. The purpose of this bill is that it essentially allows the Minister for Energy, Environment and Climate Change to direct the Essential Services Commission to set a fair price for Energy, and that is to be known as the Victorian default offer. What it will do is replace standing offers that are currently provided by Victorian Energy retailers. Those standing offers from the retail sector are generally at the higher end of the scale, and I guess it is just the reality of the situation of how we live in this day and age—to get the best price people are forced to shop around rather than revert to the standing offer. As the second-reading speech says, a review panel was established in November 2016.
Two former government ministers, John Thwaites and Terry Mulder, were part of that panel, as was Patricia Faulkner. The purpose of that review was to improve outcomes for electricity and gas consumers. From my perspective I do not think you have to be Einstein to be able to work out why energy prices in Victoria have escalated so abruptly and so substantially over the past few years. Indeed I am sure it is an issue in many electorates. Our office is regularly inundated with people who are having to deal with cost-of-living expenses and particularly gas and electricity prices. Certainly a number of businesses and a number of householders are regularly upon us. The rise of energy prices has had a massive impact in so many quarters, particularly, as I say, given that prices have risen so drastically and so sharply in a relatively short space of time. As I said, there are some tools available for people to shop around and try to find the best offer.
I must say that on a personal level I have done that and I do that regularly, and I would certainly encourage other people to do it. Since the deregulation of prices there has certainly been an element of people who I have spoken to who say, ‘The principle should be that we should already be offered the best possible price and not be reverting to a standing offer’, which, as I said, is generally at the worst end of the scale, if you like, when you are comparing energy prices. Some reviews have taken place, and generally we will see fixed and variable charges on our electricity and gas prices. One of the examples that came to my attention recently was from one of my local sporting clubs. When you look at their energy bill, it is just confounding in terms of the number of charges that are applicable. How in God’s name they are meant to be able to compare their energy bills against others is something we have not quite gotten to the bottom of.
On this particular electricity bill, which is from one of my local soccer clubs, there are 12 different charges. Under energy charges you have got peak energy and off-peak energy charges. You have got market charges, a participant charge and an ancillary services charge. You have got metering charges, which include the meter charge itself and a retail supply charge. You have got environmental charges, a small-scale renewable energy scheme charge, a Victorian energy efficiency target charge and a large-scale renewable energy charge. There is a network charge, a standing charge, a peak energy charge and an off-peak energy charge. How anyone is supposed to interpret such an bill or an invoice is beyond me. The point I am making is that if we can make life easier for consumers when it comes to retailers and what retailers are not only putting on their bills but also charging to make sure consumers get the best deal, then it is important that as legislators we support that.
I do want to make the point on this invoice received from the soccer club that there are a number of environmental charges, and I do not think people understand in totality that people are paying for some of the environmental upgrades and systems or programs that the government has in place. I think that is important to understand. I think it is like any situation where you have an essential service. If you have got minimal supply, then the market forces are only going to put the price in one direction, and that is up. You can apply that to any market. If you do not have enough supply and there is certainly massive demand—in this case we are talking about energy demand—then there is only one way to push the price, and that is up, given you have got limitations on generation capacity. With that, I have to put on the record again my concern over decisions that this government has made. The decision to triple the coal royalties for a specific industry in my community was a bad decision. Spending an extra $252 million on electricity generators in this state was not a good decision, and that is only going to force prices one way.
Allowing Hazelwood to close and losing 22 per cent of Victoria’s generation in one hit—again, it is only going to push prices in one direction. I heard some of the debate earlier about the promise the Premier made that prices would only go up 4 per cent, and they have certainly gone up a hell of a lot more than that. That was always going to be the case when you have got the demand-supply scenario running out. Again I put on the record that people are impacted. I am still receiving phone calls from former Hazelwood workers and contractors who only have casual employment. They might be working interstate. It is a really difficult situation for so many people following the closure of Hazelwood. Now we find ourselves in the situation, because we have lost that generation capacity, that we are paying businesses to shut down at peak times and compensating them hundreds of thousands of dollars and in totality tens of millions of dollars. We have had to deliver diesel generators to shore up supply. We are now importing electricity from other states. We are load shedding. We are putting residents and business offline because we do not have capacity.
I am raising these points because it all comes back at the end of the day to price. If you do not have enough dispatchable energy generation in this state, then prices are going to rise. It is as simple as that. You do not have to be Einstein to work that out. I am also concerned as we move forward that the current government has set a renewable energy target of 50 per cent by 2030. What does that mean? What does that mean for consumers? What does it mean for my community? In the example of Hazelwood closing we have seen that drastic rise in prices for consumers. We cannot afford to have that happen again.
You cannot close down power stations without having replacement generation. The market will dictate that prices will go up, and we will all be hit in the hip pocket for that. With the government setting a renewable energy target of 50 per cent by 2030, the question that many in my community are asking is: what does that mean? Does that mean more closures of power stations in my community? Does it mean more units going offline? Because at the moment—I think it was raised in question time today—75 to 80 per cent of generation in Victoria is by coal. Getting to that target obviously means there has got to be an impact upon my community, and we need to understand now what that might be. In closing, in terms of energy prices it is incumbent on us to make sure that we do all we can to ensure that the retail companies are doing the right thing by the consumers, and it is not just doing the right thing by price but making sure that we are receiving energy bills that are easy to read and easy to compare and making sure that we can get the best possible price—because at the moment we are not. That is not the situation. That is not occurring. The question on this legislation is also how many people are actually on standing offers in Victoria. My understanding is that it is decreasing, and that is a good thing, but if this helps consumers in the long run, then I support the legislation.