The Victorian Liberal Nationals Coalition Plan

For
Energy and Resources





THE LIBERAL NATIONALS COALITION PLAN FOR ENERGY
AND RESOURCES

Victoria has benefited greatly from the open, flexible and competitive energy
market established by the previous Government.

Labor opposed those reforms every step of the way while they were in
opposition, but now praise the virtues of choice, competition and the private
sector.

Victoria now faces new energy challenges on which the Labor Government
has failed to act, including the need to avoid the threat of increasing
blackouts, secure new generating plant and upgrade the reliability of electricity
transmission and distribution, while ensuring a transition to cleaner coal
generation as speedily as possible, alongside development of the greatest
practicable use of renewable and other lower emission energy sources.

The Liberal Nationals Coalition is committed to providing an affordable,
reliable and sustainable energy supply for Victorians and to foster the efficient
and responsible operation of Victoria’s earth resource sectors.





Ted Baillieu | Leader

Michael O’Brien
Victorian Liberal Nationals Coalition

Shadow Minister for Energy and Resources
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LABOR’S FAILINGS

Eleven years of the Labor Government have seen:

 A comprehensive failure by the Labor Government to keep their 1999
election pledge to “guarantee reliable supplies of gas, water and
electricity.”

 Five years in a row of statewide blackouts.

 A failure to ensure transmission and distribution reliability to cope with
“extreme weather” events.

 A growing risk of more future blackouts due to inadequate investment
in new power generation.

 Failure to properly protect power stations and other critical energy
infrastructure against unauthorised entry or attack by environmental
extremists, criminals or terrorists.

 Victoria’s vital Latrobe Valley power supplies and economic future
under threat due to State Labor failing to stand up for Victoria over the
Federal Labor Government’s bungled emissions trading scheme.

 Inaction on expert reports on how to reduce blackouts, speed up
restoration of supply, make it easier for consumers to report blackouts
and keep consumers informed about progress on supply restoration.

 Cover-up of the damning expert report on the April 2008 windstorms
and blackouts, action which may have helped save lives in the
February 2009 bushfires.

 Failure to act on Auditor-General recommendations about improving
the bushfire safety of power lines.

 A bungled, over-budget roll-out of new electricity “smart” meters that
should have allowed customers to better manage their electricity use
and greenhouse emissions but has only delivered significant cost
increases to the electricity bills of Victorian families and businesses.

 Legislation that requires electricity retailers to offer a “fair” feed-in tariff
to any customer who supplies feed-in power to the grid, but there is no
clear specification of what a “fair” tariff is, and a complex and
bureaucratic oversight arrangements have deterred the widespread
uptake of this scheme.
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 Introduction of a Premium Solar Feed In Tariff scheme that while
paying a seemingly high 60 cents a kilowatt hour for electricity fed into
the grid, imposes so many limitations on the scheme that makes it of
limited benefit. Other issues include:

o The tariff is limited to a household's net feed-in of electricity.

o It only applies to a principal place of residence.

o No requirement for the customer to be paid for the electricity
they feed in; they can only earn a credit to be offset against
future electricity bills.

o Unused credits are extinguished every 12 months.

o Unused credits are extinguished if the customer changes
retailer.

 Millions of dollars spent on a “black balloons” advertising campaign that
has failed to provide Victorians with the practical information they need
to increase their energy efficiency.

 Continued unnecessary red tape and delays making life harder for
small prospectors and large scale miners alike.

 Release of a glossy but ultimately empty position paper “Victoria’s
Energy Future” that was vacuous, late and out of date.

 A Climate Change White Paper that sets significant targets concerning
greenhouse gas emissions reduction without providing the necessary
roadmap to explain how the reductions are to be achieved nor
explaining what the impact will be on family energy bills.

 Despite Labor’s commitment in 2002 to have a minimum of 10 per cent
of Victoria’s energy generation capacity using renewable sources by
2010, renewable energy still accounts for only five per cent of Victoria’s
energy generation, the same as in 2000.

 Labor have failed to deliver even half of their promise on wind energy.
In 2002 they stated that their policies would deliver 1000MW of wind
capacity by 2006. At the end of October 2010 there was only 427.7MW
of wind capacity in Victoria, and the planning process authorised by
Labor has divided regional Victorian communities.
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UNDER A LIBERAL NATIONALS COALITION
GOVERNMENT:


MANAGING THE LATROBE VALLEY TRANSITION

A Liberal Nationals Coalition Government will:

 Invest $30 million into the Latrobe Valley Industry and
Employment Roadmap, with $5 million from the Liberal Nationals
Coalition’s Regional Growth Fund in addition to the existing $25
million Latrobe Valley Advantage Fund.

 Fight for the Federal Government to provide transitional
arrangements for Victoria’s Latrobe Valley generators to ensure
our on-going security of supply.

 Clear the way so that rapid future investment in new lower-
emission base generation capacity can proceed once uncertainty
over Federal Labor’s emissions trading scheme or alternative
measures is resolved.

 Work with the Federal Government, industry and the local
community to facilitate the phased transition from high-emission
coal-fired electricity generators to lower impact generation.

 Establish, in consultation with industry, a program to identify
potential sites for new power plants, and to resolve as many
planning, fuel source, infrastructure and other logistical issues as
possible in advance.

 Introduce tough penalties for any unauthorised entry to power
stations and other critical electricity infrastructure and ensure that
electricity companies have sufficient security measures in place.

 Work with all segments of the Latrobe Valley community to ensure
the Valley continues to thrive despite the challenges posed by
responses to climate change.

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With brown coal generation providing well over 90 per cent of Victoria’s
electricity consumption (and the Hazelwood facility providing approximately 23
per cent), the transition from our historic reliance on coal to a greater use of
gas and renewable electricity must occur in a phased manner so as to ensure
that Victoria’s security of supply is maintained.

In March 2010 the Australian Bureau of Agricultural and Resource Economics
(ABARE) forecast that for the period 2007-08 to 2029-30, electricity
generation in Victoria will have the lowest average annual growth of any state
or territory at just 0.9 per cent compared to a national average of 1.8 per cent,
despite increasing energy demands.

To avoid Victoria becoming dependent on other states’ electricity generation,
greater capacity will need to be built here. Victorians rightly expect that in
regulating the energy sector, the State Government will ensure that the lights
stay on.

It is therefore essential that Victoria actively engage with the Federal
Government on the shape of any national energy policies that will affect
Victoria’s generation capacity. A national approach to climate change
involving limiting greenhouse gas (GhG) emissions must not require
Victorians to shoulder an unfair share of the burden.

A Liberal Nationals Coalition Government will work with the Federal
Government and industry to facilitate the rebalancing of Victoria’s energy
generation portfolio from our reliance on high-impact brown coal-fired
generators, such as Hazelwood, to lower-impact alternatives including clean
coal, gas and renewables.

While the new power plants will be constructed by the private sector, the
Victorian government needs to do all it can to facilitate and speed up the
process for investment in new power plants to proceed as soon as possible.

The Labor Government stood by this year while TRUenergy shelved plans to
construct a 1000MW gas-fired power plant at Yallourn until 2015, postponing
the transition from coal to gas-fired generation by at least two years.

New gas fired plants, drawing fuel from the recent discoveries of large
additional gas reserves around Australia, will be crucial in order to replace the
electricity generated by coal fired plants that may face closure under any
national emissions limitation scheme or similar measure.

Victoria’s power plants and key transmission and distribution facilities are vital
state infrastructure. This makes them potential targets for terrorist attacks.
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They have already been targets for environmental extremists who have
invaded power stations, placing at risk their own lives and the safety of power
plant workers, as well as threatening generator shutdowns that would cause
power shortages costing the state millions of dollars. While people have the
right to peaceful and lawful protest, they do not have the right to use violence
to attack other people’s property and put the vast majority of Victoria’s
electricity supply at risk.

A Liberal Nationals Coalition Government will ensure that power company risk
management plans are fully up-to-date and co-ordinated with police and other
emergency services. We will also ensure that standard security measures and
protocols are developed across the power industry, and that the capability of
power companies and emergency services to actually implement these plans
is independently audited.

We will also facilitate the necessary planning and other approvals and co-
operation by government agencies for power companies to undertake
appropriate and reasonable security upgrades to protect against terrorism,
extremist invasions and criminal activity.

A Liberal Nationals Coalition Government will also ensure there are clear
offences with tough penalties for those who invade vital infrastructure and put
the safety of workers and the security of the state’s power supplies at risk.


RELIABLE POWER DISTRIBUTION

A Liberal Nationals Coalition Government will:

 Act to increase the reliability of Victoria’s power supply system
and ensure that when unscheduled blackouts occur Victorians
can get the information they need.

 Work with regulators to set service standards that require:

o clear information to be provided to consumers by retailers
and distributors about what contact points can be used to
report faults and to obtain information about likely supply
restoration time;

o power companies to allow customers to use their home,
business or mobile phone number as a single, readily
remembered reference number when they contact the
power company about faults or updates;
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o power companies to provide a fault reporting and update
service that will allow fault and restoration information to be
made available by SMSing the simplified customer
reference number; and

o establishment of a single “ portal” that channels calls, SMS
messages, emails and web site inquiries directly to the
relevant power company using the customer’s reference
number.

 Reduce the impact of blackouts by harnessing stand-by
generation, and promoting national rules that facilitate use of
customers’ stand-by generating plants to help meet peak energy.

 Work with regulators and industry to establish an incentive-based
scheme for large-scale energy users to voluntarily reduce usage
at key times to support the maintenance of supply.

 Work with national electricity regulators to ensure that:

o a comprehensive assessment is developed into the effect of
changing weather patterns and likely future “ extreme
weather” events on the reliability of Victoria’s power
supply;

o the reliability standards and requirements to be met by
power companies are revised accordingly; and

o any necessary progressive infrastructure strengthening is
allowed for in the power companies’ funding arrangements.

Over the last five years, Victoria has suffered major blackouts each year.

In February 2005 storms took 410,000 Victorians off supply. In J anuary 2006
high temperatures and storms caused 618,000 supply interruptions. In 2007 a
bushfire forced rolling power shutdowns across the state. In April 2008 storms
took 420,000 Victorians off supply, many of them for days on end. In J anuary
2009 breakdowns in distribution and transmission and problems with the
Basslink interconnect caused power supply loss more than 500,000
Victorians.

Throughout this series of increasing problems there has been chronic neglect
and inaction by the Labor Government.
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Following these events the Essential Services Commission has called for
improved customer call centre management, increased use of non-operational
staff, better information provision, standardisation of emergency response
levels, better media communications, alternative communications
mechanisms such as the use of SMS messages, more effective use of local
radio and television stations and better coordination with other emergency
services. The Labor Government has failed to act on those recommendations.

Blackouts can occur for two different reasons. The first is when a physical
fault cuts off all supply to an area. The second is when lack of generation or a
transmission fault means there is not enough electricity to supply all
customers. With the first type of blackout, what needs to be done is fix the
fault and/or find an alternative way to route power to the affected customers.
Power cannot be restored until that is done.

However, with the second type of blackout, there is much that can and should
be done to minimise the extent of the blackout. Under the Labor Government,
blackouts have been more disruptive than they needed to be, because Labor
has failed to put in place the necessary rules, technology and arrangements to
reduce the extent of blackouts required, protect vulnerable users, share the
remaining burden more fairly, and keep customers informed about what is
going on.

Across Victoria, many large electricity customers have stand-by generation
plants to ensure their factory, office or other facility will continue to have power
in a blackout.

If a blackout hits that customer’s area, the customer will need that stand-by
generation plant for their own use. When there is a blackout in some parts of
the state the standby generation plants in other parts lie idle and unused.

Each of these plants individually has only a small output, but collectively they
have the ability to make a significant contribution to Victoria’s power supply
needs in a time of power supply breakdown.

A Liberal Nationals Government will work with regulators to establish a
regimen where customers with stand-by generation plants that they don’t
need for their own immediate purposes can sign up to have their generation
plant used to supply power into the grid in times when there is a major power
supply breakdown. Those customers will be able to receive an annual fee for
allowing their generation plants to be available for this use, and a further
payment for any power they supply in times of supply breakdown.

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In addition, there are large industrial energy users that can reduce their
demand in the event of a major power supply breakdown. This can relieve
pressure on the grid. Reducing demand to reduce the impact of supply
constraints (known as “negawatts”) is a form of demand management that has
been underutilised under Labor.

The more customers who can be signed up to these programs, the smaller the
impact of any blackouts will be for families and community facilities, as well as
for farms and businesses with time-critical operations that cannot afford to be
off supply.

A Liberal Nationals Coalition Government will ensure that where there is
sufficient notice of a looming power shortage that threatens blackouts,
mandatory power restrictions will be activated so that blackouts can be
avoided. Where applicable, these mandatory restrictions will be time limited,
for example so that they apply only during time of afternoon peak demand, to
limit their burden.

Where unexpected blackouts occur and supply cannot be restored quickly, a
Liberal Nationals Coalition Government will work with regulators so that rolling
blackouts are shared fairly around the state, and that advance notice of
scheduled blackouts is widely released as far in advance as possible.

In particular, advance notice will wherever possible be given to radio stations
and other media outlets, as well as published on the internet, so that families,
community organisations, farms and businesses know of an impending
blackout in advance and can make preparations accordingly.

When the power goes off – at home, on the farm, or in a factory or business –
consumers want to know that the power company is aware of the blackout
and is acting to fix it. They also want to know when the power is likely to be
restored and are entitled to expect that this will be done as quickly as is
reasonably possible.

Without electricity many of the usual means of communication, including
television, modern home telephones, email and web sites are lost. With the
lights out at night, it is also not easy to scramble to find accounts or other
documents which give unfamiliar phone numbers or account numbers.
A Liberal Nationals Coalition Government will require power companies to
provide clear information for consumers on faults and obtain updates on
supply restoration by phone. We will also work towards simplifying this
process through the potential use of a single universal reference number such
as their home or mobile phone number as well as proving access through
SMS, email or the internet.
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PREVENTING BUSHFIRES: SAFER ELECTRICITY ASSETS

A Liberal Nationals Coalition Government will:

 Create a $50 million fund to begin crucial work to reduce the
number of bushfires started by ageing electricity assets.

Five of the major fires that started on Black Saturday were caused by the
failure of ageing electricity assets. Among these was the Kilmore East fire
which led to the deaths of 119 people. The Bushfires Royal Commission has
emphasised that the failure of electricity assets has been one of the primary
causes of catastrophic fires in Victoria during the past 40 years. This is only
set to get worse as components of the distribution network pass the end of
their engineering lives. The Commission has recommended swift and decisive
action to replace ageing electricity infrastructure with safer technologies that
deliver a greatly reduced bushfire risk. This amounts to a major call to action
yet the Labor Government’s response has been to announce a taskforce. It
will take almost a year before this taskforce provides its final report.

By stark contrast, the Liberal Nationals Coalition will immediately begin work
to replace the most dangerous electricity assets in Victoria. We take the view
that the replacement of these ageing assets is unavoidable and that action
should be taken as a matter of priority to avert the loss of more lives in fires
caused by their failure. Unlike the Labor Government we will not leave it up to
electricity distributors and households to fund this important work. We will get
the ball rolling with the creation of a $50 million fund to replace distribution
assets in the areas of highest bushfire risk. Following this it is anticipated that
additional funding will be made available to continue the 10-year work
program recommended by the Royal Commission. Only the Liberal Nationals
Coalition will act to provide safer electricity assets to help prevent deadly
bushfires.

This initiative is funded in our Bushfire Response policy.


FEED-IN-TARIFFS

A Liberal Nationals Coalition Government will:

 Strongly support feed-in tariffs that provide a fair reward and
encourage the supply of renewable and low emissions energy into
the grid.

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 Direct the Victorian Competition and Efficiency Commission
(VCEC) to inquire into and report on the design and
implementation of a market-based gross feed-in tariff scheme.

 Ask VCEC to examine the following possible features of a market-
based gross feed-in tariff scheme:

o A requirement for electricity retailers to include in every retail
contract an offer to purchase all power generated by a
customer’s feed-in facility.

o The tariff available to all solar, wind, fuel cell and other lower
emission sources.

o The retailer to pay the customer at the end of each normal
billing period any amount earned by a customer from the feed-
in.

o Providing that customers can be paid in cash, not just in
credits that are wiped out if not used.

o Providing that customers feeding in to the grid at times of peak
demand can access the higher prices that are available at such
times.

o Offer the potential for payment of a higher rate where the
transmission and distribution savings are greatest, such as in
regional Victoria.

o Apply to feed-in sources installed anywhere, including
businesses, farms, community organisations and all
residential premises - even vacant land so long as there is a
connection point.

o Require no hidden cross-subsidy from other consumers.

The way in which Labor has structured its net feed-in tariff has failed to
adequately promote the adoption of solar and other renewable forms of
distributed generation.

Government should work to ensure that ordinary consumers, businesses,
farmers and community organisations can receive the full social value of their
contributions when they play their part in contributing energy sources that help
reduce our nation’s GhG emissions.
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For electricity supply, this may involve market reform so that anyone who
feeds electricity into the grid, and not just commercial scale generators, will be
able to receive the full value of the power they contribute.

There is significant community support to provide separately for the feed-in of
power to the grid and the drawing of power out of the grid. Under a gross
feed-in tariff, any source feeding into the grid would be able to earn a price
based on the value of the total amount of power fed in, determined on a basis
that is fair and straightforward. The price the customer pays for any power
they purchase and draw out of the grid would then be determined separately.

The experience of other jurisdictions, such as New South Wales, is that a
poorly designed gross feed-in tariff can have considerable economic
consequences that distort the electricity market, does not deliver value for
money in terms of GhG emission reductions and is not sustainable in the
longer term.

For this reason, the Liberal Nationals Coalition will have VCEC conduct an
inquiry into the features that a market-based gross feed-in tariff scheme
should have, with a focus on promoting the take up of lower emission
generation and ensuring economic responsibility and sustainability.

It is proposed that the current “premium” net feed-in tariff scheme will remain
in place as an additional option for the time being. Retailers will also be able
to continue to offer a “one for one” or other feed-in tariff under the existing
“fair” tariff requirements.


WIND FARMS

A Liberal Nationals Coalition Government will:

 Support wind farms in appropriate locations.

 Support the advance identification of suitable sites for wind farms
and facilitation of planning processes.

 Restore fairness and certainty to the planning system for wind
farms and will ensure:

o that the placement of turbines will be no less than two
kilometres from the nearest home unless a contract
between the resident and wind farm developer is agreed;
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o the reinstatement of local government as the planning
authority for wind farm applications;

o the establishment of a shared payment system for
landowners whose properties are within one kilometre of
the nearest turbine, as a compensation mechanism for
adjacent landholders;

o the establishment of ‘no-go’ zones for wind farms at places
such as Wilson’s Promontory, the Mornington and Bellarine
Peninsulas, Surf Coast and Great Ocean Road regions,
McHarg and Macedon Ranges, Dandenong and Yarra
Ranges and sections of the Bass Coast;

o the exclusion of wind farms in or near national and state
parks, designated tourist areas and designated regional
population growth corridors; and

o the public availability of all data on the energy output of
wind farms.

It is time to give local communities the key role in deciding where wind farms
will go and restore fairness and certainty to the planning process for wind
farms.

A Liberal Nationals Coalition Government will also establish new guidelines
relating to the construction and operation of wind energy facilities to monitor
noise and strobe lighting impacts on nearby residents, as well as shadow
flicker and bird kills at wind farm sites.

The Liberal Nationals Coalition supports the development of the renewable
energy sector as an important contributor to the sustainable delivery of
Victoria’s future energy needs.

The Liberal Nationals Coalition wind energy plan will provide certainty to
operators and communities. It will minimise the effect of wind farms on our
natural environment and ensure that our coastal landscapes are protected.


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CLEANER COAL

A Liberal Nationals Coalition Government will:

 Actively promote research and development in technology to
reduce emissions from coal-fired generation and encourage the
development of carbon capture and storage.

 Commit to promoting the development of Victoria as a CCS hub,
including confirming the continuation of the $30 million
CarbonNet project.

 Introduce a restriction on new approvals for coal-fired power
stations that would exceed a target emission level of 0.8 tonnes of
CO2 per megawatt hour.

 Work with the Federal Government to ensure that Victoria has
access to its fair share of federal funding for the development of
cleaner coal technology, CCS and geosequestration.

Coal-fired electricity generation has been a bedrock of Victoria’s competitive
advantage for decades, providing relatively cheap and reliable baseload
power.

Measures dealing with climate change will require a rebalancing of Victoria’s
energy generation portfolio towards lower emission sources, but Victoria’s
dependence on coal-fired generation cannot be changed overnight.

As well as encouraging new and emerging technologies in gas and
renewables, it is important that Victoria be at the forefront of efforts to reduce
the GhG impact of coal-fired generation. This will assist to secure the longer-
term future of the communities within the Latrobe Valley and provide an
opportunity for Victoria’s brown coal assets to continue to be used, but in a
more environmentally responsible manner.

That is why a Liberal Nationals Coalition Government will actively promote
cleaner coal technology including retrofitting of existing coal-fired generators,
the further development of CCS and geosequestration and restricting the
development of new coal-fired generators to those meeting emission target
levels that the Coalition agreed to in the Climate Change Bill.

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A Liberal Nationals Coalition Government will also stand up for the interests of
the Latrobe Valley communities that have an important economic stake in the
future of lower emission coal-fired generation, as well as the broader Victoria
community that depends on Latrobe Valley generators for reliable electricity at
an affordable price.

Unlike Labor, a Liberal Nationals Coalition Government will unambiguously
stand up to any Federal government policy proposal that will
disproportionately impact on Victoria or communities within it. Climate change
poses challenges that cross state and national borders. Victorians cannot be
expected to shoulder a disproportionate share of the burden in any policy
responses to climate change that come from Canberra.


RENEWABLE AND LOW EMISSION ENERGY PROJECTS

A Liberal Nationals Coalition Government will:

 Double to $82 million the Energy Technology Innovation Strategy
(ETIS) competitive grant funding available for pilot renewable
energy plants and technology projects, and extend eligibility to
low emission technology such as fuel cells, co-generation and tri-
generation.

 Provide $100 million to the TRUenergy Large Scale Solar Power
station near Mildura, subject to Federal funding, as well as the
remainder of the $50 million to Silex for their solar energy plant as
required under agreement, and advocate for additional grant
funding from the Commonwealth’s Solar Flagship program.

 Maintain other levels of grant funding for research, development
and commercialisation of renewable energy projects and ensure
that all forms of renewable energy are eligible to access grant
funding. In particular, we will ensure that smaller-scale projects
using innovative technology are eligible for funding.

 Work with local governments, building owners and estate
developers seeking to develop and install co-generation and tri-
generation plants.

 Encourage and facilitate further Victorian-based research into and
trials of the use of algae to reduce greenhouse emissions. We will
make clear that grant rules allow algae-based technologies to
apply for funding.
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 Promote the development of solar power generation with the aim
of securing 5 per cent of Victoria’s energy generation from solar
power by 2020.

 Work with proponents of renewable generation projects to ensure
that Victoria receives its fair share of Federal government funding
available for the promotion of lower emission generation.

 Review the timing of government support for low emission project
milestones to ensure that funding is available at the most
appropriate and critical time to facilitate viable developments.

 Promote better consumer understanding of the issues involved
with the installation of solar PV generation.

Labor recently reallocated $41 million in uncommitted ETIS funds to provide
competitive grants for pilot renewable energy plants and technology projects.
The Liberal Nationals Coalition believes that supporting a variety of renewable
and low emission technology will serve Victoria’s longer term interests as we
re-balance our electricity generation portfolio and that is why we will boost the
funding available under the scheme to $82 million.

We will also support large scale solar technology in Victoria through the
current $150 million of funding commitments for nominated facilities (subject
to the availability of federal funding needed to ensure project viability) and
advocate on their behalf for a share of the Commonwealth’s Solar Flagship
fund.

In areas such as co-generation and tri-generation, Labor has barely taken any
action. Co-generation and tri-generation involve buildings (or, indeed, distinct
communities such as housing estates) producing electricity, hot water, space
heating and (in the case of tri-generation) cooling from small gas-fired
stations.

In Labor’s Climate Change White Paper, the term “co-generation” was
mentioned only twice (the second of which was a mere repeat of the first
mention).

As co-generation utilises the waste heat from electricity generation to provide
hot water and space heating, it is a much more efficient form of energy
generation and has greatly reduced GhG emissions for the same energy
demand, especially compared to brown-coal generated electricity. It also
supports energy security as the generation takes place on-site, removing the
building’s reliance on the electricity grid and increasing energy efficiency by
reducing transmission losses.
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Co-generation and tri-generation plants have been deployed across the
London borough of Woking, while Sydney is increasing its use of this
technology. In addition to extending eligibility for pilot program grants to co-
generation and tri-generation, a Liberal Nationals Coalition Government will
take steps to address regulatory barriers that inhibit the take up and
economic viability of this technology in Victoria.

A Liberal Nationals Coalition Government will also review the timing of
government support for low emission project milestones to ensure that funding
is available at the most appropriate and critical time to facilitate viable
developments, while protecting the interests of Victorian taxpayers.

Many Victorians have made the decision to invest in solar panels for their
homes, to reduce their dependency on grid electricity and to make their
personal contribution to lowering greenhouse gas emissions.

However, Labor’s failure to explain to Victorians the potential consequences
of such a decision – including the potential loss of off-peak electricity rates -
has meant thousands of Victorians have been left disillusioned and out of
pocket.

Labor’s incompetence has meant that Victorians who have paid thousands of
dollars out of their savings to help the environment by going solar have been
caught unaware that their decision may lead to higher electricity bills, thereby
undermining community support for domestic solar generation.

A Liberal Nationals Coalition Government will provide practical information
that explains to Victorians all relevant information about switching to solar so
that consumers can make a fully informed choice.


ENERGY EFFICIENCY

A Liberal Nationals Coalition Government will:

 Provide practical energy efficiency and emissions reduction
advice for households and small business.

 Ensure that the Victorian Energy Efficiency Target (VEET) scheme
has in place safeguards to prevent rorting which undermines
efforts to deliver energy efficiency.
 Support the extension of the Energy Saver Incentive to small and
medium enterprises (SMEs).

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 Continue grant eligibility for other energy projects seeking to
achieve lower emissions or enhanced energy efficiency, such as
use of fuel cell technology.

 Maintain energy efficiency rebate schemes, public housing and
low income energy efficiency programs.

 Require government departments and agencies to implement and
report annually on a comprehensive range of benchmarks for their
energy use and efficiency, in accordance with guidelines to be set
by the Minister for Finance as part of the whole-of-government
performance measurement regime.

The Labor Government’s “help” for families and businesses to boost their
energy efficiency has largely rested on little more than its “black balloons”
advertising campaign.

Most families and businesses already want to do the right thing with energy
conservation, and don’t need more awareness raising advertising. What they
need is better practical information and advice on what they can actually do
about energy conservation. What technologies are currently available and
usable? What are they likely to cost? What can be done on a limited budget?
What can be incorporated into an extension or renovation? Which
professionals, tradespersons and retailers have skills and experience in
energy-efficient products and services?

A Liberal Nationals Coalition Government will re-orient the Labor
Government’s energy efficiency promotion programs so as to make available
practical, useful advice and information on energy efficiency to Victorian
families and businesses. This will include an opportunity for individual
inventors, manufacturers and suppliers to showcase their products and
capabilities in a forum and format focused on facts rather than sales pitches.

Where applicable, we will work with industry associations to ensure
consumers can find the information they need about improving their energy
efficiency seamlessly and without duplication.

A Liberal Nationals Coalition Government will extend the Energy Saver
Incentive to SMEs, as many such enterprises can contribute to energy
efficiency which benefits their bottom line as well as delivering better energy
and environmental outcomes for the state.

We will also put in place appropriate protocols to deal with widespread
concerns regarding rorting of measures under the Victorian Energy Efficiency
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Target scheme whereby credits are claimed for activities that have not in fact
taken place.

Government as a major energy user can both set an example and reduce
costs to taxpayers through responsible use of energy.


SMART METERS

A Liberal Nationals Coalition Government will:

 Implement the Auditor-General’s recommendation to ensure that a
proper cost-benefit analysis of the smart meter project is
undertaken and determine whether the rollout should be
suspended during such an analysis.

 Revise the technical specifications and cost recovery regulations
of the smart meter project to ensure that the technology is
appropriate and the cost impact on Victorian households and
business is minimised.

 Implement the Auditor-General’s recommendation to commission
a program review by the Gateway Unit of the Department of
Treasury and Finance on governance and implementation of the
smart meter program to date.
 Introduce regulations dealing with the use of information gathered
from smart meters to ensure the private information of consumers
is appropriately protected.

The Labor Government’s roll-out of so-called “smart” meters to 2.5 million
homes and businesses across Victoria has been a disaster.

Unlike other states, such as Western Australia, which have proceeded
carefully with trials of smart meter technology, the Victorian Labor
Government has blundered ahead at huge cost to electricity users.

From 2010 every Victorian household and the vast majority of businesses are
paying for smart meters via higher electricity bills, whether or not they have a
smart meter installed.
The extra cost of smart meters appearing on families electricity bills ranges up
to $107 in 2010, with higher charges to apply in 2011.

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Once a smart meter is eventually installed, it still won’t work as the
Government has promised. Without an in-home display unit or similar device
to display the real time electricity usage information consumers will not be
able to adjust their usage to save them money and reduce their greenhouse
gas emissions. These devices may not be available for some time and the
cost is yet to be determined.

The Auditor-General found that the original project cost of $800 million has
blown out to as much as $2.25 billion – every cent of which will be paid for by
Victorian electricity users through higher bills.

This cost blow out has been exacerbated by the Labor Government’s
panicked decision to impose a moratorium on time-of-use pricing until after
the 2010 election, which distribution businesses have confirmed will add
millions of dollars to the project cost.

The Auditor-General also found “the merits of the economic case for the
project are quite uncertain” and “it is…possible that there will be an
inequitable…transfer of economic benefits from consumers to industry”.

This led to the Auditor-General recommending that the Government “re-
assess the economic viability of the AMI project by updating the cost-benefit
analysis to reflect existing and emerging risks as well as the impact of
changes to scope and underlying assumptions.

The Labor Government’s cost-benefit analyses to date have proven to be
wholly unreliable.

A Liberal Nationals Coalition Government will implement the Auditor-General’s
recommendation by ensuring that a full, independent cost-benefit analysis of
the smart meter program is conducted. Given the serious doubts over the
economic case for the project, Victorian families deserve to know if continuing
with the project in its current form will amount to throwing good money after
bad. To that end, the cost-benefit analysis will examine what changes should
be made to the project (including any amendments to technical specifications
and cost recovery procedures) to ensure that the project will represent
appropriate value for Victorian electricity users.

A Liberal Nationals Coalition Government will not support gold-plating of
electricity networks through the smart meters project at the expense of
Victorian families.

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The Liberal Nationals Coalition will determine whether the rollout of the
program should be suspended during the conduct of an independent cost-
benefit analysis following an assessment of the impact on consumers of a
suspension. We will also implement the Auditor-General’s recommendation to
commission a program review by the Gateway Unit of the Department of
Treasury and Finance on governance and implementation of the smart meter
program to date. This recommendation was rejected by the Labor
Government in an attempt to cover up the shocking mismanagement of this
project to date.

Serious concerns about the potential use of data collected by smart meters
that could compromise the privacy of individuals have been identified by the
Privacy Commissioner.

A Liberal Nationals Coalition Government will work with industry, consumer
groups and the Privacy Commissioner to develop appropriate regulation to
ensure that the personal information about the activities of individuals in their
homes that may be identified by smart meter data is treated with the
appropriate confidentiality.

A Liberal Nationals Coalition Government will also work urgently with other
governments and industry participants to promote access to technology that
will give customers the ability to monitor and manage their power use and
greenhouse emissions as soon as possible at an affordable price.


RETAIL COMPETITION AND MARKETING

A Liberal Nationals Coalition Government will:

 Continue to support full retail competition in the Victorian energy
market as being the best way to keep downward pressure on
electricity and gas prices at the retail level.

 Work with regulators, industry and consumer groups to ensure
that the public is educated to understand their rights and
responsibilities in entering into or changing retail energy
arrangements and that retailers observe consumer protection
laws in their marketing arrangements.
 Encourage better community understanding of the factors that
affect energy prices and options available to consumers to reduce
their energy use and resulting bills.

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A dynamic, competitive and efficient energy market benefits its customers.
That has been the experience of the major industry reform undertaken in the
1990s by the previous government.

Since that time the introduction of full retail competition has been embraced
by Victorian energy customers who have elected to shop around for a better
deal from their electricity and gas retailers.

In 2009 Victoria recorded a combined switch rate (electricity and gas) of 26.3
per cent - the highest recorded in the world for a fully contestable market.

The Liberal Nationals Coalition remains strongly supportive of our competitive
retail market.

However, concerning instances of sharp practice or misleading conduct in the
marketing of gas and electricity retail offers continue to be reported. These not
only affect the customers concerned, but undermine public confidence in the
market.

A Liberal Nationals Coalition Government will work with regulators, industry
groups and consumer groups to promote the education of consumers and
best practice in retail energy marketing.

We will also promote better understanding of the reasons for fluctuations in
energy prices and the practical measures that consumers can take to cut their
energy use and their bills.


REGULATION

A Liberal Nationals Coalition Government will:

 Fight the risk of growing bureaucracy and unaccountability in
national energy market regulation.

A Liberal Nationals Coalition Government will give high priority to simplicity,
clarity and speedy decision-making in the design of the national energy
market. We will push for comprehensive, published benchmarks and
performance indicators for all aspects of the national energy market – not just
technical measures of market performance, but measures of the timeliness
and quality of political and bureaucratic decision-making.

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A Liberal Nationals Coalition Government will also strive to establish clear
lines of political accountability for decision-making in the national energy
market and regulatory structure, to avoid the development of a bureaucracy
answerable to no-one and a Ministerial Council that allows individual
governments to deny responsibility.


IDENTIFYING BARRIERS TO LOW EMISSION GENERATION

A Liberal Nationals Coalition Government will:

 Commission the Victorian Competition and Efficiency
Commission (VCEC) to identify and report on regulatory and other
barriers to the development of a network of distributed renewable
and gas-fired electricity. This report will examine:

o regulatory barriers inhibiting the take up of co-generation and
tri-generation in Victoria; and

o the consumer price consequences of different generation
types to give Victorian households, businesses and
policymakers a better understanding of the likely cost impacts
of rebalancing generation towards lower emission sources

The Commissioner for Environmental Sustainability has previously
recommended such a study as a valuable tool to assist Victoria to meet its
growing energy demand from lower-emission generation sources, a
recommendation which the government has failed to support fully.
Victoria’s historical and current reliance of brown coal-fired generation means
that the barriers to re-balancing Victoria’s energy portfolio towards lower
emission sources such as gas and renewables are significant.
Labor’s time in government has been marked by piecemeal policy on the run
responses.

The Liberal Nationals Coalition will undertake a thorough and systematic
examination of the regulatory and other barriers faced by lower emission
technologies and use the results to promote the adoption of lower emission
technology at the most efficient price outcome for consumers.

VCEC will be asked to identify regulatory barriers inhibiting the take up of
technology such as co-generation and tri-generation in Victoria and to
recommend what action needs to occur to remove such barriers. EC’s
examination will also focus on the cost impacts that different generation
sources will have on household and business power bills to help improve
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community understanding of the likely consequences of shifting to a lower
emission generation mix.

Importantly, policymakers will have better access to data that will help to
ensure that taxpayer funded lower emission generation subsidies are directed
to the most efficient and effective generation forms to ensure that taxpayers
receive maximum value for money.


NATURAL GAS FOR REGIONAL VICTORIA

A Liberal Nationals Coalition Government will:

 Establish a $100 million Energy for the Regions program to
leverage natural gas expansion across regional Victoria.

For many in regional Victoria, a lack of energy choices forces them to use
expensive LPG or electricity for cooking, hot water and heating. In winter,
many families use at least two bottles of LPG per month for heating. Because
of the expense, low income families and pensioners in regional Victoria often
ration or even go without winter heating.

Households with reticulated natural gas can save in the vicinity of $600 and
$1200 a year in energy costs.

Moreover, the availability of natural gas will facilitate a substitution from GhG
intensive grid electricity, delivering important environmental benefits to the
community as a whole.

The Energy for the Regions program will deliver $100 million over four years
to help expand natural gas to communities across regional and rural Victoria.

Regional and rural councils will be able to nominate local communities to be
part of the program. The funding will be available to leverage gas extensions
so that communities are able to connect to this cheaper, cleaner and more
reliable energy.

As a start the Coalition will, subject to applications from the relevant councils,
start work on delivering natural gas to an initial twelve towns including: Avoca,
Lakes Entrance, Invermay, Winchelsea, Heathcote, Orbost, Warburton,
Marong, Bannockburn, Terang, Maldon and Huntly.

Energy for the Regions will be funded through the $1 billion Regional Growth
Fund.
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MINING AND PROSPECTING

A Liberal Nationals Coalition Government will:

 Not impose new public land use charges on prospecting
excursions organised by not-for-profit prospecting associations.

 Not introduce new charges for prospecting.

 Preserve the independence of the Mining Warden.

 Work with industry groups to reduce the level of overlapping
regulation and bureaucracy that often confronts the minerals and
resources sector.

 Prioritise legislative reform to improve the effectiveness of
industry regulation.

 Support investment in geoscience to facilitate investment and
development in the Victorian minerals and resources sector.

Under Labor, the minerals and resources sector has suffered from too much
bureaucracy, too much uncertainty and too little consultation.

Respected international research organisation the Fraser Institute found that
Victoria is the worst jurisdiction in Australia when it comes to government
policies designed to support mineral exploration, and even lags behind
jurisdictions such as Mali and Botswana.
Regulatory duplication, uncertainty and inconsistency were identified as key
factors holding back the responsible development of Victoria’s natural
resources.

The Liberal Nationals Coalition will work with the sector to improve regulation,
reduce uncertainty and duplication to attract more jobs and investment to our
state in the minerals and resources sector.

A Liberal Nationals Coalition Government will not require individuals or not-
for-profit bodies to pay licence fees for prospecting on public land or bringing
prospecting groups onto public land where charges did not previously apply,
unless they are carrying on those activities on a commercial basis.
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Labor’s Licensing System for Tour Operators and Activity Providers on Public
Land in Victoria will introduce requirements to obtain a licence and pay a fee
for a range of activities on public land. These new rules threaten to impose
licence fees even on not-for-profit prospector associations and clubs if they
organise prospecting excursions that involve non-club members.

The sacking of the Mining Warden by the Labor Government was an attack on
an independent statutory position that has responsibility for dealing with
disputes to which the Government is often a party. A Liberal Nationals
Coalition Government will respect the important role the Mining Warden
performs and will ensure that the office is maintained and, unlike Labor,
respect its independence. The Liberal Nationals Coalition will amend the
powers of the Mining Warden to better facilitate the office’s capacity to resolve
disputes in a streamlined, effective manner.

Resource sector businesses often face overlapping regulation, including
environmental, planning, Department of Primary Industries and other agency
requirements. The mining and prospecting industry has expressed frustration
with the failure of DPI under Labor to properly consult with stakeholders. A
Liberal Nationals Coalition Government will establish a working group
involving affected industry groups and regulators to review and reduce
unnecessary bureaucratic overlap and ensure that DPI is required to consult
with industry in a meaningful and timely way.

The mining and resources industry has been seeking reform of Victoria’s
outdated mining legislation to which the Labor Government has only
responded with tentative amendments. A Liberal Nationals Coalition
Government will prioritise the introduction of further modernisation legislation
and will ensure that DPI consults with stakeholders on the detail surrounding
the implementation of the changes.

A Liberal Nationals Coalition Government will support the continued promotion
of geoscientific data and analysis to assist industry to have access to high
quality information to promote the responsible development of Victoria’s
minerals and resources sector.





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TOTAL COSTINGS:

Recurrent funding.

Policy 2011/12 2012/13 2013/14 2014-15 Total
Additional
funding for
ETIS grants
$10.25m $10.25m $10.25m $10.25m $41m
Total $10.25 m $10.25 m $10.25 m $10.25 m $41 m


Authorised by Tony Nutt, 104 Exhibition St, Melbourne VIC 3000.

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