Government leans on AGL over Liddell ahead of meeting

Federal ministers are piling the pressure onto energy company AGL ahead of its chief executive, Andy Vesey, meeting with Prime Minister Malcolm Turnbull on Monday to discuss the future of the Liddell power station.

Treasurer Scott Morrison said that “it’s very important we keep Liddell open”, while Energy Minister Josh Frydenberg said “our position is that AGL needs to act in the public interest and that is ensuring that there is no shortfall when Liddell closes”.

The meeting comes as a Fairfax-Ipsos poll shows the Coalition trailing 47-53%, which is in line with the last Newspoll. But Turnbull has a big 48-31% lead over Bill Shorten as preferred prime minister.

As he grapples with the power issue, Turnbull has swung increasing emphasis onto coal, and is now focused on trying to prolong the life of Liddell for at least five years beyond its scheduled closure in 2022.

Meanwhile the Nationals at their federal conference passed a motion calling for the phase out of subsidies to renewables, underlining the divisions that are making it difficult for the government to craft an energy policy that will reassure investors.

Last week AGL made it clear that it will not keep Liddell – in the Hunter region of New South Wales – operating beyond 2022.

But the government is attempting to hold the company to an indication that Vesey gave during a meeting of energy retailers with Turnbull and ministers a month ago that AGL would be willing to sell Liddell to a “responsible party”.

After Turnbull last week referred to this, the company told the ASX that it “has made no commitment to sell the Liddell power station”.

Morrison, who said he was in the room when Vesey made his comment, told the ABC on Sunday that “there are plenty of responsible parties who I’m sure will be happy to take [Liddell] on”.

“I think those who are trying to shut Liddell have a vested interest in talking down what the viability of it might be.

"It doesn’t surprise me that a big energy company wants to see a big source of supply go out of the market. I mean, that drives prices up and that benefits energy companies,” Morrison said.

Pressed on why there was the sudden government focus on keeping Liddell open, Frydenberg said that last week’s report from the Australian Energy Market Operator (AEMO) showing looming shortages in the coming years had “reset the debate”.

“The advice from AEMO is absolutely unequivocal. We need more supply and more dispatchable power,” he told Sky.

Asked what the government would do if it couldn’t get an arrangement to extend Liddell or other coal-fired power stations, Frydenberg said: “We’ll continue to press the public case, both with the energy companies and in the parliament, and I do think that the dial is turning. I do think the penny has dropped.”

People recognised that dispatchable baseload power “is absolutely key to the reliability of the system”.

He said that the five years between now and the scheduled closure of Liddell “is a long period of time in which the necessary preparations can be made to either continue the life of that coal-fired power station, or ensure that there is no supply shortage. Now that is what we are going to investigate tomorrow with AGL”.

The Nationals motion urged the government “to freeze renewable energy subsidies at their current level for 12 months and then phase in a subsidy reduction program that will remove all renewable energy subsidies over a five-year period”.

It also said energy retailers should “be required to disclose all federal and state renewable energy subsidies on commercial and private energy bills”.

Matt Canavan, who resigned as resources minister because of his dual citizenship but would be reinstated if cleared by the High Court, told the party conference: “We’ve taken all the subsidies away from our farming sector and now the biggest protection racket going around is in our renewable energy sector”.

In terms of jobs, renewables were “just a short-term sugar hit”, he said.

Asked about the Nationals motion, Frydenberg said: “Look, we’re a broad church in the Coalition”.

“Our policy is very clear … we recognise that we need thermal generation more than ever, coal and gas, but also there’s an important place for renewables”.

Renewables were “not just a short-term sugar hit – they are an important part of the energy mix”, Frydenberg said.

They were coming down significantly in price and their storage technologies were improving. “But the reality is the AEMO report has brought into clear focus that our attention should be on dispatchable, reliable base load power.”

Shorten said he was “concerned that the divisions in the government over renewable energy and the clean energy target will keep seeing power prices go up and up”.

“The solution to the energy crisis we’re facing right now isn’t talking about extending a coal-fired power plant in five years’ time. We need more generation in the system now. That means more gas, more renewables and more storage,” Shorten said.

POSTSCRIPT

The Nationals’ federal conference narrowly defeated – 55-51 – a motion urging a ban on the burqa.

The motion called on the government “to implement a ban on full-facial coverings in all government buildings and public spaces, excluding places of worship, where it assists with security and public safety”.

The debate saw Nationals MPs divided over the motion, which was moved by the member for the Queensland seat of Dawson, George Christensen.

Christensen warned about the message sent by voting against the motion, given the support in the electorate for it.

He reminded delegates of the approaching Queensland election, and said the party was “bleeding to the right”. The motion was not just about the burqa, he said, but applied to face coverings at protests by the far left and the far right.

But Mark Coulton, from the NSW seat of Parkes, said passing the motion would lead to headlines saying the Nationals were anti-Muslim. He also said he was worried about a “slippery slope”, where “if things aren’t going as well as we’d like, we can look to people who are different and say it’s their fault”.

Deputy Prime Minister Barnaby Joyce did not speak in the debate but voted against the motion. Later he said a burqa ban could damage Australia’s trade relations with Islamic countries.

Christensen said on Twitter that he would continue to push for the government to adopt the motion as policy. Pointing to the slim margin of the defeat, he said several delegates in favour had not been able to be present for the vote.