OFFICE OF ENERGY PLANNING AND CONSERVATION
DIRECTOR’S OVERVIEW

This Report is required under Section 13 of the Energy Co-ordination and Planning Act 1995

The primary tasks undertaken by the Office of Energy Planning and Conservation (OEPC) during 2002/03 have been the provision of policy advice on a diverse range of energy issues and the continuing development of the State's framework for regulating the gas supply industry.

Two major energy issues have arisen in the past year with potentially significant ramifications for Tasmania's energy industry:

• The Council of Australian Governments, as part of its Energy Policy Framework, engaged an independent panel, headed by former Senator and Commonwealth Minister for Resources, the Hon Warwick Parer, to undertake the Independent Review of Energy Market Directions.  The Review Panel's final report, Towards a Truly National and Efficient Energy Market, was released on 20 December 2002.  It contains high level discussion and recommendations on the future structure and operation of the Australian energy market.
• The Commonwealth Minister for Environment and Heritage, Dr David Kemp, has initiated an independent review of the Mandated Renewable Energy Target (MRET) pursuant to the MRET enabling legislation, the Renewable Electricity Act 2000.  The Review Panel will report by the end of September 2003.

The OEPC has played the major role in developing and coordinating the State Government's policy response to both these major issues, endeavouring to ensure any policy and associated legislative changes that may arise are not to the detriment of the State.

The Parer Report sets out what the Review Panel believes to be the key steps in the process toward an efficient national energy market.  The OEPC prepared the State Government's response to the Parer Report.  The OEPC has also been involved in the development of a coordinated jurisdictional response by the Ministerial Council on Energy (MCE) through the MCE's Standing Committee of Officials to the recommendations contained in the Parer Report.

The OEPC also provides policy advice to the Minister on a regular basis regarding all issues considered by the MCE.

The MRET Review aims to broadly examine the extent to which the measure has reduced greenhouse gas emissions and encouraged additional renewable generation investment, including the mix of technologies, and the interim and overall renewable energy targets.  The OEPC prepared the State's two submissions to the MRET Review Panel, submitted in May and July 2003, in addition to preparing material for the Minister's face to face meeting with the Panel in April 2003.

The year has also seen substantial progress associated with the major energy projects the State Government has been pursuing as a driver to support and sustain Tasmania's economic development for the medium to long term.

Continued facilitation of the Tasmanian Natural Gas Project has been a primary focus of the OEPC over the year.  The OEPC has also worked closely with the Department of Economic Development and the Department of Treasury and Finance on the facilitation of a gas retail market in the State and investment in gas distribution infrastructure.

The OEPC has continued to develop and fine-tune the regulatory arrangements under which the State's gas supply industry will operate.  This has involved working with a range of stakeholders to develop a light-handed regulatory framework for the gas supply industry.  Such a framework will ensure the safe and efficient delivery of gas to end users while meeting the policy objectives of the Tasmanian Government and the needs of industry participants and consumers.

The Basslink project proceeded to financial closure in November 2002, after receiving the required environmental and planning approvals from the Tasmanian, Victorian and Commonwealth Governments by September 2002.  The OEPC has continued to assist the Department of Treasury and Finance in preparing for Tasmania’s entry into the National Electricity Market once Basslink is completed.

Aside from the MRET and the associated review, greenhouse has continued to be a major issue driving energy policy in both the Australian and Tasmanian contexts.  The OEPC continues to liaise closely with the Australian Government over the further development and implementation of Australian Government renewable energy programs designed to reduce greenhouse gas emissions and accelerate the development of Australia’s renewable energy industry.

The OEPC plays a key role as program manager/administrator of the Remote Renewable Power Generation Program (RRPGP) in Tasmania.  The RRPGP is an Australian Government initiative, with the aim of replacing and/or displacing the use of diesel fuel for electricity generation in off-grid locations.  The funding that each jurisdiction receives is based on the diesel fuel excise paid by publicly owned power utilities on diesel used for public electricity generation outside the main electricity grids.  Tasmania's estimated allocation is $6 million.  In the past year the OEPC successfully administered funding to Hydro Tasmania's King Island wind farm expansion project.

While the Department of Premier and Cabinet has responsibility for greenhouse policy in Tasmania, the OEPC is frequently called upon to provide expert advice on energy-related greenhouse issues.  The OEPC has also continued to work closely with the Department of Primary Industries, Water and Environment in the implementation of greenhouse policies in Tasmania.  The Office also represents the State on the Energy Efficiency and Greenhouse Gas Working Group, one of the working groups formed under the MCE.

Other major initiatives begun in 2002/03 include:

• the development of a household rebate scheme for remote area power systems displacing/replacing diesel use for electricity generation under the RRPGP;
• commencement of feasibility assessment on a solar water heater installation program on the Bass Strait Islands;
• the Energy Market Update, aimed at providing a historical and up-to-date statistical and analytical picture of the nature of Tasmania's recently/newly diversified energy market;
• the development of regulations introducing Minimum Energy Performance Standards and Compulsory Appliance Labelling for prescribed domestic electrical appliances;
• the pilot Government Energy Management Program;  and
• the development of a comprehensive Energy Infrastructure Plan.

Rob Nicholl
Director of Energy Planning
Office of Energy Planning and Conservation