JOURNALIST:...fire away with some questions and just ask you about, you know, ahead of the summer compared to last summer et cetera. Obviously, you put your demand response in place and that sort of thing, so are you all set to go? Are you feeling relaxed about the coming summer?

AUDREY ZIBELMAN: Well I never feel relaxed [inaudible], that doesn't come with my job description. But we are- we do feel prepared. So we did preparations for last summer - they were extensive, and this summer we repeated that and we've working with the generators. We've worked with the [inaudible]... we've made sure there's fuel availability and we also identified where we would have gaps, where we didn't have additional reserves and now we're in the process of procuring those reserves. So we feel like we're very well prepared for the summer.

JOURNALIST: Is it likely to be more of a challenge though this [inaudible]...

AUDREY ZIBELMAN: What we did is we prepare for the conditions so we work very closely with the Bureau of Meteorology, we have a partnership with them. We are forecasting a year when we're going to have [inaudible]... Victoria and South Australia. We're also [inaudible] forecast that, also [inaudible]... potential for more bushfires, so it's for all those reasons we go out and do the preparations and get the reserves. I would say that as always, when you're forecasting a hot summer with extreme weather and we're always concerned, so that's why we go out and take the precautions to make sure we're ready.

ANGUS TAYLOR: Nobody really wants a [inaudible]...

AUDREY ZIBELMAN: Yeah. We've got a [inaudible]... reserves for the summer for- mainly for Victoria.

JOURNALIST: And as that was less than last year, are you feeling more confident that you've got a greater handle on actually controlling it this year and have that network put in place?

AUDREY ZIBELMAN: Well we have additional resources in South Australia and Victoria this year, so those counted towards the need to make the reserve requirement. So it's not a question of better handle, it's actually just a change to the supply demand situation.

JOURNALIST: [inaudible] seem to be less cost for them- for consumers to actually put in place this plan and demand response compared to last year it [inaudible]...

AUDREY ZIBELMAN: I'm not quite sure that I would agree with that characterisation. I mean, it ended up being around six dollars a customer, so for an insurance policy - and that's really what we're buying is an insurance policy - that's pretty much not a lot of money when you think about it. And then of course, we're always looking for everything to keep costs down. But the cost of the two hour blackout is much more expensive than that and certainly when we're talking about keeping the lights on in hot weather - we have safety issues and house [inaudible]. So having insurance it's almost like your car insurance - you never want to use it, but you need to have it and that's exactly what we're going [inaudible].

JOURNALIST: And how worried are you about Victoria and South Australia specifically, I mean, there's obviously still some issues there in terms of generation?

AUDREY ZIBELMAN: Well we're not worried, I mean, I think the point is that it's a tight supply and demand equation and so what we want to do is make sure we're going to address it. There is an ongoing issue that we have to address in the now, which is making sure we have enough dispatchable capability during all hours of the year. That's why we were really pleased to see the COAG Energy Council pursue the reliability component and that we're going to need to continue to do planning going forward because this isn't something we want to guess at or something we want to hope for good weather, we want to make sure we have the plans in place for- on an annual basis, on a long term basis to make sure that we have sufficient resources.

JOURNALIST: All righty Minister, how satisfied are you that the [inaudible]... obviously be pretty difficult for the federal government?

ANGUS TAYLOR: Yeah, look, I don't think any of us are relaxed because this is one of those [inaudible] we've got to deal with each year and I am confident that AEMOs done a nice amount of work to get us to a position where we can- we've got every chance of meeting that demand and we have to be vigilant. And it underscores the importance of the reliability obligation. I mean, this is why it's so crucial now that later this year the states sign up to the reliability obligation [inaudible]... all the indications are support, but we need this in place so that we have preparation using, not just [inaudible] of the demand we've got to meet with an increasing volatile sourcing of supply.

JOURNALIST: What about the water situation? Audrey, how's that looking after the dry winter we had in terms of water availability [inaudible]...?

AUDREY ZIBELMAN: Well we've worked very closely with Snowy Hydro and others and I think the water situation going into the summer looks good. We also just recently had some good news from the Bureau of Meteorology - they're expecting the weather in December, it's good news for New South Wales. And so we feel pretty good about that. And again, I just want to add to what the Minister said: this is obviously a very, for us, the most- December's the time that we focus most on all the weather conditions and what we do is continuously work the issue and if there are concerns from [inaudible] early on because [inaudible]... until the last months before summer. But right now we're feeling we're [inaudible]. It's always, I mean, it's always important this is a never say never [inaudible]... can fail, we can have fires but in terms of preparation we've done all the [inaudible].

JOURNALIST: And just on that, quick question of the cost; are you expecting that actually though that the arrangements you've put in place this year will cost less than [inaudible]?

AUDREY ZIBELMAN: It really depends on how the arrangements work because, you know, as portion right now- a portion of our costs you prepay and- for availability, and a portion you pay when you use the resources. If we don't need the resources, we won't pay for them, and then the cost will be much lower. In fact, I think at this point none of our [inaudible] have pre-payments, so if we're not going need the resources, the cost would be zero. If we need them, that means we need them to keep the lights on, in which case it's an extremely good insurance policy because you're only paying for it when you use it.

JOURNALIST: [Inaudible] Which is- I mean, [inaudible] to minimise the cost.

JOURNALIST: We just had some more general questions as well.

AUDREY ZIBELMAN: Sure. Then I'm going to go. Thank you, Minister. Thank you, Arthur.

JOURNALIST: I just have some- I noted your comments the other day on AGL's [inaudible] expect the rest of the industry to follow suit. What are you expecting there? You know, have you [inaudible] talks with those companies recently?

ANGUS TAYLOR: Oh, I'm delighted that AGL has responded in the way it has. We have been pressuring these companies to deliver a cut for standing offers and in New South Wales and Victoria, they're cutting standing offers by 10 per cent, which is a significant reduction in those states. And we were absolutely delighted that AGL has stepped up to the plate. We now need the other companies to do the same. And this is- we're obviously moving to the new regime from 1 July. I saw this as a down payment and actually an act of good faith by the energy companies to say to the Australian people, hardworking small businesses, and families, that they deserve a better deal, particularly those small businesses and families who don't have the time to spend hours on the phone negotiating.

JOURNALIST: How effective do you think this new divestment powers will be in convincing some of the other companies to follow suit in terms of AGL?

ANGUS TAYLOR: Well, I think- the divestment powers are focused on a different thing, which is making sure there's enough supply in the market. I mean, this is the great challenge we have had and we will continue to have in the coming years, is to have enough supply in the market to drive prices down and to keep the lights on. That's not a trivial challenge. Companies withdrawing capacity at short notice or for strategic reasons without replacing that capacity are acting irresponsibly. My hope is that companies will do the right thing and make sure there is enough supply in the market well ahead of time if capacity's going to be removed and we won't have to use these powers. That's a- this is a last resort and should only be used as a last resort. But if the welfare of and the interest of the Australian people, those families' and businesses' welfare is at risk, then they expect the government to act and we will. But as I say, it's a last resort and the legislation will be structured that way.

JOURNALIST: Can I ask about the underwriting mechanism?

ANGUS TAYLOR: Yeah.

JOURNALIST: Are you expecting that to actually yield new coal capacity?

ANGUS TAYLOR: I'm expecting it to yield new 24/7 supply that would otherwise not be in the market. That's what I'm expecting and we need that supply. I mean, if- look, if we ever had- needed clear signals that we need it coming in, we've got a 250 per cent increase in variable supply coming in, solar and wind supply, in the next three years. Two hundred and fifty per cent increase from 17.5 terawatt hours to 44.5 terawatt hours - that is an enormous increase. And so retaining the dispatchable 24/7 supply in the system is a very big challenge in that environment and so we realise we need to make an intervention to make sure that occurs.

JOURNALIST: You are expecting-

ANGUS TAYLOR: So we are expecting 24/7 supply, and there's a lot of different ways you can provide 24/7 supply. You can do it through gas; you can do it through coal; you can do it through hydro; you can do it through solar thermal. Those different technologies provide different advantages and disadvantages, but the crucial thing is we want the supply and 24/7 dispatchable supply.

JOURNALIST: And have you had much interest from coal producers?

ANGUS TAYLOR: We've had interest from lots of producers and lots of project proponents. I mean, there has been enormous interest. We had a roundtable that I personally hosted in Sydney with about 70-odd participants. It was extremely positive. And I think there's a recognition in the industry that we do have a challenge with keeping that 24/7 supply. And at the end of the day, the workers in aluminium smelters, cement factories, abattoirs, other energy-intensive businesses, fertilising manufacturers - they know they need that 24/7 supply; and if we don't have it, those jobs go to other countries. It is as simple as that. And actually, the emissions will go up because those countries, often China, will have higher emissions per unit of output than we did. So, this is good policy to keep these jobs in Australia for Australia, but it's also good policy for the world.

JOURNALIST: There's been some reporting that the Government could indemnify coal power producers from the future carbon risk, carbon liability, and [inaudible]-

ANGUS TAYLOR: I'm not going to get into the bank. Banking is an issue for what happens when we're sitting down, working with individual projects. What I'm going to say, though, is that we will underwrite supply necessary to get prices down and to keep the lights on. And getting into picking fuels or technologies; that's not the game. The game is supply, price, keeping the lights on.

JOURNALIST: How concerned are you about the three big gentailers and the power they've got in the system? I mean, is that [inaudible]...

ANGUS TAYLOR: Sixty to seventy per cent market share in each market. The ACCC laid this out very clearly. This is a serious concern. There's no doubt about it, and in fact, many of the recommendations - most of the recommendations - made by the ACCC were based on that concern. My background is in competition policy; we have an issue with competition policy in this market, there is no doubt about it, and that has resulted higher prices and risks to reliability. And this is an essential service and it needs to- the service providers to it need to recognise that and show responsibility with that. And it's extraordinary to see Bill Shorten and the Labor Party siding with the energy companies on these issues when Australian households and businesses are the ones who have been ripped off when there has been bad behaviour - and there has been bad behaviour.

JOURNALIST: I guess Shell and some of those companies potentially worry about especially the Liberal government [inaudible] an interventionist's stance.

ANGUS TAYLOR: Well shareholders expect their companies to act responsibly in so many different ways. Many shareholders now have corporate social responsibility mandates and obligations. Many of the funds require that. So, one of the obligations they should and can reasonably expect of companies they invest in is that they do the right thing by their customers. Well, these companies need to do the right thing by their customers, and they haven't always done that.

JOURNALIST: The ACCC's today announced that they are starting off the process for that sixth monthly review that they're carrying out. Do you think that they'll find out if behaviour's changed at all in the period between now and March?

ANGUS TAYLOR: Well, they need to watch closely and alert the Government and regulators if they see a problem. This is the point now - I would like to think that in an industry that's now getting very close scrutiny the companies will get on and do the right thing. My firm belief is that the best regulation is regulation whereby the companies do the right thing by their customers and deliver on their own part. And that's why the whole philosophy of what we're doing here is to have a big stick, but if the companies do the right thing we don't need to use it.

JOURNALIST: Just one on the firm decision on the CKI - obviously not your decision [inaudible] - but there is a bit of a concern here that much needed foreign investment in the sector more generally is going to be deterred, do you think, by this- the government squabbling (*) with the CKI?

ANGUS TAYLOR: We've got $15 billion of investment in electricity generation in the next two or three years, so we're not having- we are not struggling to attract investment. On CKI, look, this is a decision for the Treasurer - his national interest test. I know he thinks long and hard about each of these decisions. The vast majority of foreign investment in Australia is not by [inaudible]; it's very much the exception rather then the rule. And I'm confident he's taken into account the right considerations in making his decision. We want most foreign investment to pass through for [inaudible]. This should only happen by exception and that's certainly been the track record.

JOURNALIST: What do you expect the response to be from retailers and generators in their submissions to the Government regarding the divestment powers? [Inaudible]...

ANGUS TAYLOR: Yeah, so we're always interest in what stakeholders think of any legislation we're bringing forward. Obviously, this will go through the normal Parliamentary processes and it's important to us.

JOURNALIST: Thank you.

JOURNALIST: Just more generally about the Labor [inaudible]; what do you think’s involved [inaudible]?

ANGUS TAYLOR: Yeah, look, I think at the end of the day what will drive their policy more than anything else is their targets, and they're [inaudible] clear about the targets - 45 per cent emission reduction target; 50 per cent renewable energy target. They have serious questions to answer about how they're going to close all the [inaudible] and refinements because that's what will happen. They have serious questions to answer about what's going to answer about what's going to happen to the transport industry in this country; they have serious questions to answer about what's going to happen to agriculture, particularly the beef industry in this country, as they seek to implement a very, very high target. And all the workers in those industries, as well as households around Australia who will be paying a very high price for electricity with that kind of emissions target, will want to know why Labor is doing this and why they think that they can go at such a pace that it's going to be a wrecking ball through the economy. So these are very serious questions to answer in a large part of our economy and it will impact every Australian. The Climate Change Authority model - a similar target to this a number of years ago and set it a [inaudible] $135 carbon tax. That's five times Labor's previous carbon tax. So this is an enormous intervention. The mechanism is secondary; the target is what will do that [inaudible].

UNIDENTIFIED SPEAKER: Thanks guys and really appreciate you coming out.