Download Bell Bay Aluminium (WORD) - Department of State Growth

BELL BAY ALUMINIUM
PACIFIC ALUMINIUM
Energy Strategy Submissions
Department of State Growth
GPO Box 536
Hobart TAS 7001
[email protected]
11 February 2015
Dear Minister Groom,
Bell Bay Aluminium (BBA) welcomes the opportunity to make a submission on the Draft Tasmanian Energy
Strategy, (the Strategy) ‘Restoring Tasmania’s Energy Advantage’.
The structure of the Tasmanian energy market is intrinsically linked to BBA’s continued presence in
Tasmania therefore the Government is to be commended in planning for Tasmania’s energy future. A
strategy that promises to deliver the lowest sustainable power prices to all Tasmanian consumers is
laudable. It is refreshing to see the positive business like sentiment that was outlined in the 2014 election
campaign has been carried through to the Strategy’s development.
The best interests of all consumers must be represented in the Strategy so it is pleasing that the Strategy
recognises the importance of balancing the needs of the State’s most vulnerable customers as well as those
of major industry and that the Government’s proposal for a second interconnector will only be progressed
on the basis of a robust business case. A full analysis of this proposal must be undertaken to determine if it
will actually ensure long term economic and jobs growth for Tasmania or just utilise State assets to support
economic growth on the mainland.
While the Strategy clearly defines and outlines a set of actions, the challenge for the Government and
Government Business Enterprises (GBE’s) is to turn the strategy actions into deliverable, tangible and
unambiguous benefits for all Tasmanian energy consumers.
In relation to the Strategy BBA makes the following observations:
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The Strategy does not acknowledge the meteoric rise in transmission charges experienced by all
Tasmanian energy consumers, which has been largely attributed to overspending leading to the
expansion of the Regulated Asset Base (RAB) and the over capitalisation of the Network. Changes
to regulations which address the over investment (including recognition of stranded assets and
associated impairments) and the inappropriate treatment of the investment risk would go a long
way to reversing the increased network charges which have been borne by consumers. As a
member of the COAG Energy Committee the Tasmanian Government should push for National
reform to the current Federal regulations to address the significant overinvestment that has
occurred in the Network.
The Tasmanian Government must commit to an independent assessment of AEMO planning and
forecasting. The regulatory framework particularly around transmission prices is based on the
required investment in transmission assets set on previous forecasts of future demand. These
forecasts have been overstated in the past. This situation has left Tasmania with a significant over
investment in transmission assets and charges. An analysis and review of the methodology that
determines future demand is required.
Bell Bay Road, Bell Bay TAS 7253 Australia PO Box 290, George Town TAS 7253 Australia
T +61 (0) 6382 5111 F +61 (0) 6382 5566 [email protected] www.bellbayaluminium.com.au
Registered in Australia Rio Tinto Aluminium (Bell Bay) Limited ABN 91 009 483 201
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BBA strongly encourages the Tasmanian Government to bring forward the establishment of Key
Performance Indicators (KPI’s) for GBE’s from the proposed start date in the Strategy of 2018/2019.
Immediate, open and transparent benchmarking of KPI’s would produce a significant change in
focus of GBE Boards and Management. This would hold Boards and Chief Executive Officers to
account for the performance of GBE’s and drive and target ongoing efficiency improvements in
these businesses.
It is noted that the Strategy does not include clear delivered energy price reduction targets from
2015 on. Without a clearly articulated position, it is difficult to determine just how motivated the
State Government is to deliver results to all Tasmanian consumers in the near term.
While historical decisions around expansion of GBE’s into ‘non-core’ businesses is noted in the
Strategy, it is not clear from the Strategy what the State Government’s future position is on this
issue or what action if any they intend to take in relation this issue.
The development of the Strategy is a constructive means to leverage the State’s existing (and future)
energy assets to have the optimum impact on the Tasmanian economy that will enable economic and jobs
growth as well as investment in the State.
Despite the State’s relatively small overall base load, Tasmania is arguably the most exposed economy to
the effects of national energy policy. It is also the most significant producer of renewable energy in the
country. Given these factors the Tasmanian Government should be leading the national energy reform
process through the COAG Energy Committee. Energy is far too important to the State’s economy and
future prosperity to follow the lead of other Australian States.
No part of this submission is confidential. BBA looks forward to continuing dialogue with the Tasmanian
Government and key stakeholders in the development of the State’s Energy Strategy.
Kind regards
Ray Mostogl
General Manager
Bell Bay Aluminium