ASIC chief to vet energy finance
The chair of the Australian Securities and Investments Commission will play a role in reviewing applications for subsidised loans from inefficient operators of coal-fired power stations.
The Energy Security Council, an informal entity, will assess any applications and advise the Australian Government. The Government announced the charter for the council, and its membership, yesterday.
The chiefs of three regulatory agencies will be members of the Energy Security Council. Alongside the ASIC chief will be the chairs of the Australian Energy Market Commission and of the Australian Energy Regulator.
The Treasurer, Wayne Swan, announced some of the members of the council yesterday.
The chair of the council will be Michael Vertigan, the chair of MyState Financial in Tasmania. He also serves as director of Aurora Energy, the state-owned generator of hydro-electricity. Swan will announce other members in the coming weeks.
One task of the ESC will be to "advise the Treasurer in a timely manner on whether [a] loan should be provided, and the terms and conditions of the loan (including the interest rate)."
Another task will be to "recommend financial assistance".
The finance will be made available "in the form of loans for generators that need to refinance their debt if finance on reasonable commercial terms is not otherwise available."
Loans or "other assistance" will be available "to address systemic risk to energy security in the event of financial distress on the part of an energy market participant."
The political role of the Energy Security Council is to provide guidance in the selection of which operators of ageing, inefficient coal power stations might qualify for public subsidies as the carbon price (which will be A$23 per tonne of CO2 from 2012 to 2014) takes effect. Subsidies may be needed to ensure some of these generators continue to operate until alternative suppliers of base-load power join the grid.
Federal aid to old-style power producers is only one element of the assistance on offer to the energy industry under the carbon pricing scheme that passed the House of Representatives yesterday.
Producers of renewable energy unable to find finance in the capital market will be able to seek funding from the Australian government through the planned Clean Energy Finance Corporation, though this body will notionally target commercial returns.
In theory, the budget for the CEFC is $10 billion, though only one-tenth of this is provided for in forward estimates.
Gillian Broadbent, a member of the board of the Reserve Bank of Australia, was confirmed yesterday as chair of an expert review whose task will be "to advise the government on the design" of the CEFC.
Broadbent may be unable to actually serve on the board of the CEFC, if this is proposed, until her third term as an RBA board member expires in May 2013.