Australian Energy Council chief executive Matthew Warren
IN August, Prime Minister Malcolm Turnbull called a meeting with eight of the country’s largest electricity companies as tensions ran high amid rising power prices. On the back of this meeting, Australian Energy Council chief executive Matthew Warren spoke to Elizabeth Fabri about how the industry can work together to drive down prices, and the urgency for a national energy reform to effect change.
Q. Can you describe your professional background?
My first proper job was as a cadet journalist with the Adelaide News. It was an old school evening tabloid, complete with hot metal printing, typewriters and not a computer in sight. I went on to write for The Australian for a few years, took myself off to Brussels in 1989 as a freelance journalist, came back to study economics.
From there I specialised in environmental economics and wrote my thesis on the impacts of container deposit systems on kerbside recycling.
As a result of that I spent the next decade working in waste management, packaging and recycling, ending up working for the food and grocery industry.
It became increasingly apparent that the most important environmental inputs not being considered in the life cycle of FMCG products was the embodied energy and water.
I then went to work for the mining industry in New South Wales, and then went back to The Australian to cover environmental policy, just as the climate change debate lit up in Australia.
After two incredibly busy years back in journalism there I got asked to run the Clean Energy Council, and subsequently the Energy Supply Association of Australia and now the Australian Energy Council.
I think the biggest highlight of my career is the privilege of meeting and working with some of the brightest and smartest people in our society (and spending New Year’s Eve in 1989 on the Berlin Wall).
Q. You joined the council in late 2015 as its inaugural chief executive, what does a typical day look like for you?
Every day is different. Clearly rising energy costs has been a hot button issue in the media. It’s also complex. So we often find ourselves briefing journalists and doing interviews.
We also engage regularly with our members and key stakeholders both formally and informally.
We are also constantly explaining and briefing on key issues in our industry. And as a national industry I’m at the airport a lot too.
Q. There’s been a lot of talk on rising electricity costs. How do you think the industry as a whole can ease the pressure on energy pricing?
Energy prices have been increasing steadily for the past decade. There have been multiple drivers for these.
At the end of last decade increases in reliability standards increased the costs of networks. This was the biggest driver of energy costs, followed by the costs of green schemes like renewables and solar PV feed in tariffs.
In the past year there has been a sharp increase in electricity prices driven by increasing wholesale prices. This has come about following the closure of large coal fired generators creating a scarcity of supply.
Scarcity increases costs, and is designed to stimulate new investment. But that investment is constrained by the lack of energy policy certainty we’ve seen in Australia over the past decade. We’ve had emissions trading proposed then cancelled, then reintroduced, then a tax imposed, then repealed.
A lot of energy businesses have lost significant amounts of money on investments made on constantly changing policy rules. So now for investment to proceed banks and other investors want to see that they can be sure they will get a return on that asset.
The best and fastest way to bring down energy costs is to deliver effective, durable national climate and energy policy. That is currently being considered by the Federal Government.
Q. What was the outcome of the energy companies meeting with the Prime Minister in August?
We met with the Prime Minister and a group of senior ministers to talk about retail energy prices and how we could bring down bills by changing retail practices. We explained that the main driver of higher energy costs was on the generation side, not retail. We agreed to look at a range of measures to increase transparency for customers. Essentially the best way for consumers to save in a competitive retail market like energy is to engage and shop around.
Q. The council has already announced its support for Dr Finkel’s Review; what’s your take on the Clean Energy Target?
We think there are a number of different policy options to deliver the certainty needed to get new generation investment in Australia. A Clean Energy Target is one of these options. The design of the CET proposed by Dr Alan Finkel creates an obligation on retailers, a bit like the Renewable Energy Target, only for a broader range of technologies. So it’s attractive in that it directly drives new investment which in turn will reduce wholesale costs.
The CET comes with a reliability obligation which requires all new investment to meet the same reliability and system requirements as the current grid. This is a useful and important design feature to make sure we are rebuilding a reliable and sustainable new grid. So we think it can work.
Q. Are you confident the Federal Government will commit to the CET, and how soon does it need to take action?
We hope so. We really hope so. We have been waiting a decade for durable energy market reform, and the consequences of this delay are being felt now in higher prices and increased risk of blackouts. We need this reform urgently.