TOM ELLIOTT: Power prices here in Victoria have apparently gone up five times in the past few years. In the last financial year, we've become a net importer of electricity from other states - historically, we've always been an exporter - and would you believe, those other states, being New South Wales and South Australia, in the next few years, are closing down another two coal-fired power stations. Surely, surely this can't end well. Our next guest is the Federal Energy Minister Angus Taylor. Good afternoon.

ANGUS TAYLOR: Thanks for having me, Tom.

TOM ELLIOTT: A pleasure. Okay. So, I happen to be on AGL's email list and they just sent me a rather nondescript e-mail just pointing out that in 2022, 2023, the Liddell coal-fired power plant in New South Wales will be shutting for good, and over a similar period, the Torrens A coal-fired power plant in South Australia, will also be shutting. Now, figures you sent to me suggest that Victoria is becoming a net importer of power. If the other states around us are shutting down their power plants, will there be enough to go around?

ANGUS TAYLOR: No. It's as simple as that. This is a very big problem. Look, if you take a step back, you go back a few years, Victoria had the lowest cost energy pretty much in the world - very low cost gas coming out of Bass Strait, very low cost electricity coming out of the coal-fired power stations in the Latrobe Valley. Progressively over recent years, this has been trashed. There's two really critical events that have done that. One is the moratorium on gas development, onshore. That's been a disaster for Victoria. You know, only good gas projects should proceed, community consultation is crucial, but a moratorium is just crazy. Secondly, the closure of Hazelwood - it's been an absolute disaster, much worse than anyone had anticipated. The premature closure of coal-fired power stations is a disaster. Now, we've got a situation where the Victorian Government is now proposing to push a lot more solar and wind into the system without turning that into reliable power. We hear the Victorian Labor Minister this morning say the answer to the problems of all this solar and wind going into the system is more solar and wind, Tom, and that is not going to work.

TOM ELLIOTT: Yeah – that’s quite right.

ANGUS TAYLOR: You can't just then take an extension cord up to Queensland coal-fired power stations, and hope like hell that they keep going, because you can't necessarily rely on other states.

TOM ELLIOTT: Well, maybe an extension cord across the Tasman Sea to New Zealand. I mean, that might work.

ANGUS TAYLOR: Well, look, at the end of the day, what Victoria needs to do is focus real attention on solving problems within Victoria and having enough reliable power, 24/7 power - that's there when the sun doesn't shine and the wind doesn't blow - within Victoria. Now, we have a number of Federal Government programs to facilitate that if the Victorian Government wants to, but frankly, right now, they're showing no interest in that.

TOM ELLIOTT: There was a day about four weeks ago here in Melbourne and it was unbelievably foggy, like the fog did not lift until well after lunchtime, and what made it worse was there was no wind. So the fog just sat there over the city. Now, if you relied upon solar and wind that day, there would have been zero power from either. There was not a breath of air, the sun couldn't get through the fog. I just worry that we talk about solar, wind, solar, wind, solar, wind, as though all we have to do is just erect these things and away we go. But it's always in the extreme. When we get those days and they do happen in Melbourne, as they do in Canberra, and even Sydney sometimes, where you get the big fog and you just can't generate any solar and you can't- and there's no wind to push round the turbines. What happens, the lights just go out?

ANGUS TAYLOR: Well, exactly. So, they're the winter days, and of course, the summer days are the very hot, still days where you have no wind and then when the sun goes down, you've lost your solar and you need backup. The simple point is there's no problem with putting in solar and wind into the system - you can absorb a certain amount - but you have to have backup for when the wind doesn't blow and the sun doesn't shine. You're putting your head in the sand if you believe otherwise. This is where the Victorian renewable energy targets, very aggressive, but without any [inaudible] of how you get the backup into the system.

TOM ELLIOTT: So what do we do? I mean, you said just before that the Federal Government's got some ideas or some policies or some plans, if only the State Government would listen to them. I mean, what is the easy solution to this, if there is one?

ANGUS TAYLOR: Well, there's a number of things. First of all, they need to drop their current, very aggressive renewable energy target. It is too much, too fast. The system can't cope. It's not to say there's not a role for renewables, there is, but it's too much too fast, Tom.   The second thing is they've got to lift the moratorium on gas. That is a disaster for Victoria on so many different fronts. You're losing industrial jobs as a result of it because of the hike in the price of gas, and you don't have the gas generators to come on quickly when the sun goes down. Thirdly, you've got to stop the premature closure of the coal-fired power stations. We saw it with Hazelwood. Now, the Combet review they've recently done is looking at bringing forward the closure of other coal-fired power stations, Yallourn for instance, in Victoria. That would be a complete disaster. Those three things will make a real difference. We are also, as a Federal Government, underwriting new firm, dispatchable generation. That's gas, hydro, and coal generation we're supporting. That ensures that you have got that backup power when you need it. Now, we can only do that with cooperative state governments, and that requires the Victorian Government to want to focus on this issue.

TOM ELLIOTT: Alright. Thank you, Angus. Angus Taylor there, Federal Energy Minister.