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Energy and Emissions Reduction - Onerous Contracts


Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Thursday, 9 September 2021

Tags: Hydro Tasmania, State Budget, Subsidies

Dr WOODRUFF - Minister, the Premier made it clear on Monday that the state Government, via the Coordinator-General, has been involved in, quote, 'negotiations around price and energy for new proponents'.

We've heard that Hydro Tasmania didn't think there was enough energy for hydrogen which contradicted the Government's position. Does Hydro also disagree with onerous and ongoing contracts it has been required to adopt with wind farm companies and gas companies?

Mr BARNETT - Do they disagree with those contracts? What is your question?

Dr WOODRUFF - Does Hydro disagree with having been put into a situation where it's required to take onerous contracts?

CHAIR - Again, Dr Woodruff, that is a question for Hydro, not for the Energy minister.

Dr WOODRUFF - I am wondering if the Energy minister has heard anything about Hydro's concerns about these onerous contracts?

CHAIR - Then you need to reframe the question to have Hydro discuss this with the minister, not asking for an opinion on what Hydro thinks as an organisation, Dr Woodruff.

Dr WOODRUFF - Thank you, Chair, the minister is capable of answering the question as he sees fit.

CHAIR - Order, I'm capable of ruling which questions are in and out in this particular committee, as I have done for the last three days, Dr Woodruff. I'm telling you that the way you framed that question is out of order and is applicable to the GBE scrutiny and not to this hearing.

Dr WOODRUFF - I made it clear that I'm happy for the minister to answer whether the minister knows that Hydro has expressed any concerns about that matter.

Mr BARNETT - I'm not sure what matter you're referring to but we have a very close relationship with Hydro Tasmania. There will be an opportunity for scrutiny in a few months' time. You could ask the CEO, the chairman and the minister at the time to answer relevant questions. The Premier's made it clear that the state is determined to implement our Renewable Hydrogen Action Plan. I encourage members to review that action plan and see what's in it because you will see the Government's vision for renewable hydrogen.

We have big plans. It's all about creating jobs, growing our economy, delivering a cleaner world with a low emissions profile as part of our Climate Change Action Plan.

Dr WOODRUFF - Minister, Hydro recorded a $197 million loss in 2019 from onerous contracts. The 2020 annual report said: 'Onerous contracts include gas contracts, lease liabilities and large generation certificates valuation'. The Premier confirmed that Anton Voss will be taking on the role of negotiating as the head of the newly formed agency, Renewables, Climate and Future Industries Tasmania. Will you, as Energy minister, be instructing the agency to continue to negotiate onerous contracts to attract businesses to the state?

Mr BARNETT - The Premier and I will be interacting very closely with Anton Voss. I have met Anton on a number of occasions and I have known him off and on for many years. He's a very credible operator and we are honoured to have him as head of this agency. We will be working in a collaborative manner. Anton Voss knows the Premier's and my plan for renewable energy or renewable hydrogen and he will be following through on those policy objectives. I have every expectation he will do it with diligence and professionalism.

Dr WOODRUFF - Is it true that there would be a requirement for Hydro to take on onerous contracts if needed, as has happened in the past?

Mr BARNETT - We will do what do what is required to work with our GBEs to get the job done, to implement our plans which will deliver more jobs, a growing economy and a cleaner world. We are delivering on that now. Anton Voss will be delivering on those policies and plans. We have a very capable team in the room here as well as others who aren't here today.

Dr WOODRUFF - Minister, have you, as Energy minister, required Hydro Tasmania to enter into onerous contracts that were, as I said, $197 million in 2019, or has the Coordinator General required Hydro to enter into these contracts?

Mr BARNETT - In terms of the Office of Coordinator General, he has had a role to play, a very important role in terms of engaging with the proponents with respect to a renewable hydrogen industry. He will have an ongoing consultation and engagement with Anton Voss, as head of the new agency, RCFIT, and in terms of the role of Hydro Tasmania going forward. We look forward to cooperating and working with them. They have a job to do, to be part of the solution and a Team Tasmania approach.

Dr WOODRUFF - Are the wind farms you outlined before - the ones that are coming online also going to be under onerous contracts? What has Hydro Tasmania provided comments to you about in relation to that?

Mr BARNETT - The wind farms I referred to before, primarily the bulk of them are privately operated and/or proposed by independent businesses and entities, and, of course, we don't control them as a Government. They are working in the free market, which we strongly support. Why are they here? They're here because we have a plan to grow our renewable energy assets. They are here because they like our Renewable Energy Action Plan. They like our Renewable Hydrogen Action Plan. They're here because we are 100 per cent clean and because we've legislated to 200 per cent by 2040. They are here because we've got the policy levers correct. They're operating in those. We're pulling the levers of public policy, it's attracting investment, attracting interest and it is fantastic that we have so much interest, and I thank them for it.

Dr WOODRUFF - That wasn't the answer to the question. They'll be needing to enter into power purchase agreements with Hydro Tasmania. Some of those often would be, private or not, onerous contracts, as have been mentioned before. Will wind farms be, will Hydro Tasmania be required to enter into onerous contracts with them?

Mr BARNETT - Clearly, I can't answer for Hydro Tasmania.

CHAIR - Exactly. Again that is a question for GBE scrutiny of Hydro Tasmania, Dr Woodruff.

Dr WOODRUFF - I'll reframe it the way I asked it the first time, which is, has the minister had the conversations with Hydro Tasmania about this?

Mr BARNETT - I can't talk about matters that are commercial-in-confidence relative to Hydro Tasmania.

CHAIR - Dr Woodruff, the call is Mr Winter's.