Power supply under threat

ABC News Online, Posted 3 hours 51 minutes ago 

Updated 3 hours 45 minutes ago

A new report shows Victoria could experience electricity shortages under an Emissions Trading Scheme.

The State Government's latest Infrastructure Audit says the private sector will be reluctant to invest in new power infrastructure in an uncertain market.

According to the report, this would result in possible shortages in electricity supply, especially during summer peak periods.

Energy Networks Association Chief Executive, Andrew Blyth, says the report highlights the need for a carbon scheme that will reduce risk for energy generators.

"The paramount issue at stake here is that we need to see a well designed emissions trading scheme that will promote a reliable and sustainable energy supply system," he said.

"With this report and of course Garnaut's report, there's obviously a recognition of the importance of a well integrated national energy network system."

The Chief Executive of Loy Yang Power, Ian Nethercote, says the Latrobe Valley energy sector would suffer significantly if an emission trading scheme goes ahead in 2010.

Mr Nethercote says the Federal Government must allow a transition period of up to 20 years for generator permits to be required.

He says the State's generators would be forced to pay about two billion dollars a year in carbon taxes if the scheme went ahead in 2010.

Mr Nethercote says the sector's hoping for more answers in a Federal Government Green Paper due out next week.

"We are concerned about some views, for example, the Garnaut Review, that suggests that generators should not be given any transitional arrangements," he said.

"I think the issue is that perhaps we don't understand what the detail is that sits behind those comments, and that would be one that I would hope would come out and be elaborated on."

Mr Nethercote says if generators had to purchase all the permits required in three years' time, the industry could be crippled.

"The amount of cash that would be required would be absolutely horrific," he said.

"We're looking at, assuming you had a 20 dollar carbon tax, then you'd be looking to find something in the order of one and a half to to two billion dollars, to cover carbon emissions for only one year."

The Opposition's Industry spokesman, David Davis, says the Government has failed to adequately plan for a future trading scheme.

"This points very directly to the Bracks and Brumby Government's failure to invest in infrastructure or to create the right climate," he said.

"This government has not put in place the arrangements that have put proper investment in place ahead of time, and now Victorian industry is exposed."

The Premier, John Brumby, has played down a new report, which says Victoria could experience power shortages under an Emissions Trading Scheme.

Mr Brumby says the Government will work with generators to ensure the State's power supply does not come under threat because of an emissions scheme.

"We do need a smooth transition," he said.

"I think there will need to be transitional arrangements, and I think governments will need to work with the generating sector to make sure that it is a smooth transition and particularly that we see the reduction in emissions that we want to achieve and we maintain security of supply in Victoria."