About the Council
The Council's purpose is to provide assurance and advice to the Treasurer in the event that systemic risks to energy security emerge, from financial impairment arising from any source, including from the introduction of carbon pricing.
The Council's functions includes assessing applications for assistance and providing advice to the Treasurer on whether financial assistance should be provided.
The categories of applications are for:
- loans for generators with an emissions intensity that exceeds 0.80 tCO2-e/MWh which need to refinance their debt if finance on reasonable commercial terms is not otherwise available under certain circumstances; and
- loans or other assistance to seek to address systemic risk to energy security in light of the financial distress of an energy market participant.
The Council will also:
- provide assurance about contingency planning,
- assist with crisis management by providing a forum for coordinated action, and
- consider trends in energy markets which are likely to lead to systemic risks to energy security.
One objective of the introduction of a price on carbon is to transform the energy sector. This means that some generators will cease to operate earlier than without this reform.
It is not the role of the Council to recommend Category B support to unviable generators unless it forms the view that temporary assistance is necessary to address systemic risk to energy security.
The Government announced other energy security measures. These measures are not the responsibility of the Council.
Other Energy Security Measures
Energy Security Fund
The Energy Security Fund has two components:
- $5.5 billion in transitional assistance, in the form of allocations of free carbon permits and cash payments, to generators with an emissions-intensity above 1.0 tCO2-e/MWh on an 'as generated' basis.
- The Department of Climate Change and Energy Efficiency is responsible overseeing transitional assistance.
- funding to support the closure of around 2,000 megawatts of highly emissions intensive generation capacity before 2020, open to generators with an emissions-intensity above 1.2 tCO2-e/MWh on an 'as generated' basis.
- The Department of Resources, Energy and Tourism is responsible for implementing this measure.
Loans for the purchase of future vintage carbon units
In addition, loans will be available to generators with an emissions intensity greater than 0.8 tCO2-e/MWh on an 'as generated' basis to support the acquisition of future vintage carbon units if commercial loans are unavailable on reasonable terms.
- Loans and loan terms will be subject to the approval of the Treasurer, but will not involve an assessment by the Energy Security Council.
- Loan terms will be designed to encourage generators to seek private finance in the first instance.
- The Treasury is responsible for implementing this measure.