Gas shortfalls a serious risk in Victoria if it’s a chilly winter and production keeps plummeting

The increasing cost of living crisis has once again forced Daniel Andrews to act, suggesting another round of $250 bonuses could be on the cards.

Victorians may soon be able to cash in on more $250 power saving bonus sweeteners, the Premier has flagged.

But Daniel Andrews has ruled out any upcoming financial support for businesses struggling with rising energy costs.

“We have provided $11 to 12bn worth of business support during a one in 100 year event. We’re looking to run a budget surplus so we simply do not have the capacity to be providing corporate payments,” he said.

“I’ve got absolutely no announcements to make on that. I think it’s highly unlikely.”

But there could be some much needed relief in sight for struggling Victorians battling to keep the lights on amid soaring energy bills.

More $250 power saving bonus sweeteners could soon be on offer. Picture: iStock

The Premier on Thursday hinted at another round of the popular power saving bonus scheme.

Under the scheme, every Victorian household is entitled to a one-off $250 payment if they compare their energy provider online.

The forth instalment - and the second round for every Victorian household - will commence from March 24.

Mr Andrews on Thursday wouldn’t rule out a future round in the next financial year.

“The fact that we’re into the forth round (of the scheme) would indicate we’re open to providing support to families when they need it,” he said.

Mr Andrews said the draft quote released by the Victorian Default Offer on Wednesday is “still better than the offer it replaced” in 2019.

He wouldn’t guarantee that the government would write to the AEC to make a submission on behalf of Victorians.

“I’m not sure we’ve made a submission in the past and I’m not sure that we’d make one now,” he said.

The cost of living is hitting Victorians hard, with many struggling to keep the lights on. Picture: NCA NewsWire

“This is a draft decision. It’s not the final decision. We should wait and see what the final decision is.

“What we need to get on with us not so much writing submissions but continuing, as we have done for eight years, is (moving towards renewable energy.

“The reason wholesale prices have gone up and have then tipped into people’s household bills is because these clunkers, these old tired fossil fuel generating power plants break down all the time.

“They just do. And they always seem to break down at the highest point of demand which has a very positive effect on the spot price.”

Daniel Andrews says he’s not worried about the potential for gas shortfalls this winter because “sufficient reserves” are available.

It comes after the national energy market operator warned that Victoria faces the risk of shortfalls in coming months if winter cold snaps occur.

But the Premier on Thursday said the key issue plaguing Victorians was price, rather than a lack of supply.

He said it proved the need for a domestic gas reserve because “we should be able to access our gas for our gas needs, first”.

Victorian Premier Daniel Andrews has hinted at another power savings payment. Picture: NCA NewsWire

“We should not be competing with the other side of the world for something that starts here and belongs to us,” he said.

“That should be reserved for our needs first.

“The bit that we don’t need - the excess - that can be sold to the world. I’ve got no problem with that, but we get first dibs on that.

“It’s not always a popular position. The gas industry don’t like it much because they love it when we are paying Ukrainian war prices here.

“We’re a long way from Ukraine.”

The nation’s energy market operator on Wednesday warned Victoria faces the risk of gas shortfalls in coming months if winter cold snaps occur.

And supply pressures are set to remain for at least three years as gas production in the state halves by 2027.

Gas production in Victoria has fallen 16 per cent over the past year following the Andrews government putting the brakes on new investment, leading to concerns about whether onshore production or imports from interstate or overseas can fill the gap in the long term.

In a report designed to signpost where investment is needed in the industry, Australian Energy Market Operator chief executive Daniel Westerman said: “The risk of gas shortfalls each year from winter 2023 to 2026 in all southern jurisdictions remains under extreme weather conditions and periods of high gas-powered electricity generation, with those risks further exacerbated if gas storage levels are insufficient.”

Australian Energy Market Operator chief executive Daniel Westerman. Picture: Nicki Connolly

Interstate supply and existing storages should help fill gaps in the market.

Interventions including the federal government’s price cap on gas, more storage and a commitment that LNG exporters will offer uncontracted gas to the domestic market before exporting it are also set to aid the situation this winter.

AEMO is set also set to get new powers before winter which will enable it to increase monitoring of the market, as well as to buy gas to boost the Dandenong storage facility.

The report also warns that unless new Victorian supply is developed, the state is forecast to become a net importer of gas from winter 2027, as its annual consumption exceeds production.

NSW and Queensland pipe upgrades together with Victoria’s western outer ring main pipeline and Winchelsea compressor duplication will help increase supplies, but the AEMO warns projects must hit completion targets and import terminal projects are needed to guard against shortfalls.

“Overall, the gas supply challenges remain, driven by the continued decline of production in the Gippsland region, along with pipeline ­capacity limitations, including capacity to transport gas to the southern states,” Mr Westerman said.

“Investments are needed in the near term to ensure operational solutions from 2027, despite falling gas consumption.”

AEMO says import terminals are needed to protect against gas shortages. Picture: supplied

Gas Energy Australia chief executive Brett Heffernan said state and federal governments needed to ditch ideology and back energy security, including renewable gas and the moves to zero-emission LPG.

“It’s been well understood for a long time that renewables such as solar and wind haven’t been delivering as promised and that, with coal-fired power closing down earlier than expected, gas will be increasingly relied upon to fill inevitable downtime gaps,” Mr Heffernan said.

“Renewable LPG will be available in Australia from 2025, replacing 11 per cent of existing demand immediately, with conventional LPG being replaced entirely by its zero-emitting fossil-free alternative by 2045 — that makes good on government 2030 and 2050 (carbon reduction) targets.”

AEMO underlined the “critical role gas-powered generation” must play in maintaining National Electricity Market (NEM) reliability, particularly during high-demand periods.

With five more coal-fired generation plants slated for closure this decade, removing another 13 per cent of the NEM supplies, a range of analysts say gas generation will become even more important to support intermittent renewables.

“Gas availability impacts the security of the NEM and operation of the NEM has an impact on gas demand.

The two markets are joined at the hip,” Mr Westerman said.

“Gas generation will enable higher rates of renewables and support the power system against … the impending retirement of coal generation.”