Matthew Guy’s power station promise to shore up supply, cut energy bills
A new power station big enough to supply the state’s hospitals and transport network, and cut family bills by an average of $355 a year, would be built if the Coalition wins the election.
Victoria State Election
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Matthew Guy has visited a pizza restaurant in Melbourne’s east where the power bill has doubled to $11,000 every 62 days to talk up the Coalition’s pledge to build a new power station in Victoria.
As the November 24 election campaign passes the halfway point, the Opposition Leader has committed to facilitating the construction of a new power station to put at least 500MW into the energy grid.
The plan would involve packaging up government services such as rail, hospitals and other major services and going to tender.
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Mr Guy said modelling by Frontier Economics showed adding 500MW to the grid would save the average household $350 a year on their gas bill.
“There’s no doubt that Daniel Andrews has lost control of energy costs,” Mr Guy said, blaming Premier Daniel Andrews for the closure of the Latrobe Valley’s Hazelwood coal-fired power station, after the state government hiked coal royalties.
“His forced closure of Hazelwood has meant that power is now out of control, the power costs in Victoria, and government’s got to do something about it, not just be a spectator or cross their fingers or hope that in the next five or ten years it might come down, it won’t,” he said.
Mr Guy said a new Liberal-Nationals government would directly invest in a power generation system by bundling up state power contracts, and putting it out to tender in the first six months before choosing a successful bid.
Mr Guy said the Coalition expected the private sector to come back with a solution involving a mix of generation, most likely gas and solar.
Environment Victoria chief executive Mark Wakeham has questioned the modelling used by the Liberals, saying it appears to factor in electricity price reductions likely under the state’s renewable energy target - despite Mr Guy vowing to dump that target.
“Without the VRET price reductions, the Liberals plan could well cost households and business more than they are currently paying,” he said.
“Mr Guy is trying to run a scare campaign convincing Victorians that power stations are on the brink of closure to justify scrapping renewable energy investment and propping up a new coal or gas plant.”
Coalition energy spokesman David Southwick said the closure of Hazelwood had reduced Victoria’s power generation by 22 per cent and led to an 85 per cent increase in energy prices.
“Under Daniel Andrews, we are seeing closures of power stations. Under Matthew Guy we see a power station coming into the market, ensuring more supply and bringing down power prices for all Victorians,” Mr Southwick said.
Ivan Milich, who owns Bucatini Italian restaurant in Mitcham, in Melbourne’s east, said his business’s power bill had doubled over the last 12 months.
“We’ve gone up to an $11,000 bill of gas and electricity for 62 days, so that’s virtually doubled since this time last year,” Mr Milich said.
“My wife and I, we are both in our 60s, and my sons are working here.
“We are working seven days a week in order to offset some of the costs of the energy bills.
“We are fortunate we are now November, December. It gets a little bit busier so you can absorb some of those costs.
“In January, February, who knows, which means we have to let some staff go who are local people.”
The new power station would be big enough to supply the state’s hospitals and transport network, and power the equivalent of at least 350,000 homes, cutting family bills by an average of $355 a year.
The Herald Sun can reveal the radical plan would let a Guy government bulk buy enough energy from the new power station to run all of the state’s major public services.
“Building a new power station in Victoria will mean lower prices for the long-term, which is going to save households and businesses hundreds of dollars every year,” he said.
The winning bidder would have to build a power station capable of producing at least 500MW, and could sell excess power to the private market.
It would need to be built with a “24/7” capacity to power up at short notice and boost supply security, meaning it is unlikely to be met by renewable sources alone.
While a station of that size is most likely to be gas fired, if the most cost-effective bid is for a large coal power station, it would be considered — with Mr Guy to declare that it is “up to the market to best determine the mode of generation”.
That is likely to put the Coalition at odds with green groups, which want non-renewable generation phased out to meet climate change targets, and with the Andrews Government, which last week announced a Renewable Energy Target of 50 per cent by 2030.
Mr Guy said the winning bid “will be determined by the lowest cost for electricity, subject to meeting tender requirements like security of supply”.
He also took a swipe at Labor and the Greens, saying “every time Daniel Andrews cuts a deal to appease the Greens, it means more taxes”.
The annual savings of $355 for an average household claimed by the Coalition is based on Frontier Economics modelling, which forecast wholesale prices if Yallourn power station in the Latrobe Valley continues to operate and an extra 500MW of power is added to the grid.
Mr Guy said the 500MW capacity could be built in a “combination” of ways using any of hydro, wind, solar, gas or coal — “provided that it is new capacity and is available to supply electricity 24/7”.
Wholesale prices in Victoria soared in 2016 when Hazelwood closed abruptly, reducing competition and supply.
To try to fill the gap, the Andrews Government has provided subsidies to build renewable energy generation.
If the Coalition wins the election and commissions a privately operated gas plant it would fit with the party’s policy to re-open conventional onshore gas drilling — if land owners give permission and get a cut of royalties — in order to increase gas supply. A ban on “fracking” would be kept.
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