MELINDA JAMES: I'm joined now by the Federal Energy Minister and Member for Hume, Angus Taylor. Angus Taylor, good morning.

ANGUS TAYLOR: G’day, Melinda.

MELINDA JAMES: Let's talk about this reform that is expected and aimed at reducing household power bills. How does it work, these market reforms? How does this wholesale demand response system work?

ANGUS TAYLOR: Well, if you're a big industrial user - you could be a steel mill like BlueScope, for instance - you offer to pull back your demand at peak times. And so you say look, we've got to consume less electricity when demand gets above a certain threshold or prices get above a certain threshold, and then you put back your demand. Obviously it's voluntary, they don't have to do it - it's a choice - but we know many of the big industrials around the place are keen to do this. Indeed, if you look at our aluminium smelters, steel, other heavy energy using industrial businesses, this is a great opportunity for them to reduce their power bill, to do something which may only be a couple of hours a year which they can do, and at the same time ensure that we have a more secure, more affordable grid. And you know, while the direct benefit may go to the industrial user, of course, there are indirect benefits to everybody because it means we have a more secure grid, less likely to see that the lights go out on those really tough days in summer, and at the same time it puts downward pressure on prices at times when the price can go right up to its caps to very, very high levels, and that's good for everyone.

MELINDA JAMES: And renewable energy advocates say that the increased reliability in the system boosts the case for more investment in renewables powering the grid. Do you agree with that?

ANGUS TAYLOR: One of the great challenges we have with renewables – and we've talked about this before - is of course when the sun goes down, the wind doesn't blow you have to have a solution, and this can help at those peak times - there's no doubt about that. So it's a great complement to the other parts of our system. It's good for all users in the system and it's particularly good for our manufacturing sector. Our manufacturing sector, as we all know, it has not been easy in recent years for them, but this will be a real plus and I know they're strongly welcoming it.

MELINDA JAMES: How is this different than what happened a couple of years ago when we had that huge heatwave and basically the market regulator said to all the huge power users around the country please power down? That was BlueScope, Australian Paper, Visy - a bunch of other companies were asked to power down.

ANGUS TAYLOR: Data centres, yeah.

MELINDA JAMES: Yeah. So, how is this different to that?

ANGUS TAYLOR: Yeah, look, that was an ad hoc arrangement and this is much more systematic - it's built into a market and it's done in a much more systematic way. And of course, it's voluntary. So you know, what we can do is we can set this market up years ahead of time if necessary. Those big industrial users can bid in, they get payments to provide that flexibility when it's needed, that can help them to reduce their power bills, and so the benefits are much more systematic, much deeper, much less ad hoc and, of course, voluntary.

MELINDA JAMES: Can we ask about the report in The Daily Telegraph this morning that the Narrabri Gas Project has finally got the Government's backing. This has been a deeply contentious project proposed by Santos in northern New South Wales. The New South Wales Government appears to have given it the go ahead. We were hearing that possibly the gas import terminal here at Port Kembla negated the need for the development at Narrabri. What do you make of that?

ANGUS TAYLOR: First of all, I haven't any more detail than the report I saw in the paper today. But look, we strongly welcome more gas coming into the market. We did a state deal with the New South Wales Government on energy a few months back. We asked them to get another 70 petajoules into the market which is about the production of Narrabri. But look, I don't think Narrabri is mutually exclusive with an input terminal - they're very different, they provide gas from very different sources. Of course, we want more local gas but we also want access to the international market, particularly at certain times of year when the demand is absolutely highest. So, you know, I would like to see as much gas as possible coming into the market. That will be good for our manufacturing, it'll be good for consumers, good for electricity because gas is complementary to renewables. It is flexible - just like the discussion we were having about the flexibility these reforms that are coming into the market now - gas provides flexibility as well and that's a very, very important part of what we need to be able to manage our grid to be affordable, to be resilient, to be lower emissions in the years to come.

MELINDA JAMES: But even after years of this project being debated the concerns of particularly farmers in that part of the world haven't been allayed about the potential impacts on the ground water supply in the Great Artesian Basin that might be posed by a coal seam gas project like this. What needs to be done to allay those fears if they're not founded?

ANGUS TAYLOR: That's why we have environmental approval processes. There's state government, primarily state government processes and that's the process that's been talked about in the paper today. My understanding is the next stage is it will go off to the IPC and that commission will look at these issues, as the department has been. You know, all these projects need to go through the proper environmental approval process, there's no question about that. But we need more gas in the system, Mel. It is crucially important if we want to have a strong manufacturing sector, if we want to have affordable energy in this country, and if we want to reduce emissions. That's a very, very important point. Gas helps us to reduce emissions in the UK, even in the US you're seeing gas playing an enormously important role in facilitating more household solar, for instance, into the marketplace.

MELINDA JAMES: Can I ask you to put your local member hat on - there were high hopes from politicians of both sides of the House, and at the local level, and at the state level that you might contribute your weight to lobbying for federal funds for upgrading Picton Road to become Picton Motorway. What do you think of that project? And is it something you support? Would you lobby for federal funds to help out there?

ANGUS TAYLOR: I'll always support better infrastructure coming into and within my electorate. Of course, the Picton Road comes into my electorate. Well look, my focus in the last couple of years has been getting upgrades to the Appin Road to happen. We have funded some upgrades to the Picton Road as well in recent years, and we'd like to see more. I mean these projects have to be led by state governments. They are state roads after all. But we're always, we're always supportive of good projects within budget constraints. As I say, the immediate focus for me has been the Appin Road because we saw some really tragic deaths there - $50 million committed there, we've just announced the next stage of the work there. But look, Picton Road, will need upgrades in the coming years, there's no question about that, and I'll look forward to proposals to come forward.

MELINDA JAMES: Angus Taylor, thanks for your time this morning.

ANGUS TAYLOR: Thanks, Mel.

ENDS